The Investment Screening Act came into force 1 September 2021, and we have now made our first experiences. Get an overview of which investments and agreements that need to be FDI-screened and how it is done.

FDI-screening is screening of foreign direct investments and special financial agreements following the rules in the Investment Screening Act. The purpose of the rules is to prevent that foreign direct investments and special financial agreements constitute a threat to the national security and public order in Denmark.

Investments and agreements which must be FDI-screened

Screening of a foreign investment or agreement in Denmark can be carried out according to two individual arrangements:

1. The mandatory notification
2. The voluntary notification

In addition, in some cases it is possible to request confirmation that an investment does not require a permit (called pre-screening).

Whether an investment or agreement needs to be pre-screened or requires permission, it is necessary to consider FDI-screening early in the planning of transactions so that the necessary time is set aside for the FDI-screening between signing and closing.

Mandatory FDI-notification

A foreign direct investment or special financial agreement, which fall within one of the five sensitive sectors, requires a permission from the Danish Business Authority, before the investment or agreement is implemented.

A foreign direct investment or special financial agreement is covered by the requirement of notification if decisive control is acquired or significant influence is gained of a Danish company. This also includes so-called "Greenfield investments", where a new company is established as well as certain joint venture agreements, operating agreements, supplier agreements and service agreements.

According to the rules, decisive control or significant influence of a company is obtained if the foreign investor acquires at least 10 % of the owner's shares, voting rights or similar control by other means in a Danish company. Furthermore, the investment must relate to one of the following five sensitive sectors:

  • Defence: Companies that either develop or produce weapons, war matériel, etc., or that provide services to the national defence, which moreover is of particular importance to the national defence's operational activities.
  • Dual use: Products, which can both be used for civil and military purposes and is listed in appendix I of the Council's regulation (EF) no. 428/2009 with med subsequent changes.
  • It security: Companies who themselves or through subcontractors develop or produce IT products and components or provide services used for the security and processing of classified information.
  • Critical infrastructure: Companies that directly or indirectly own, operate (outsourcing), have regulatory responsibility for, develop or manufacture technology that constitutes critical infrastructure.
  • Critical technology: Companies that develop or manufacture artificial intelligence, machine learning, robotics, aerospace, quantum, nuclear, nano and biotechnology. 3D-printing for the manufacture of components for industrial use is also included.

Pre-screening in case of doubt of whether FDI-screening is required

In certain situations, it can be difficult to deny if an investment must be screened. For instance, in practice it can be difficult to assess if a technology company is covered by the rules concerning critical technology as the definition in the law covers several areas.

In case of doubt, a foreign investor can by a pre-screening have an advance assessment of whether a contemplated investment or agreement is covered by the rules for mandatory notification. However, this is only possible if the doubt concerns investments or agreements within the sectors of critical infrastructure and critical technology.

If an investment or agreement is implemented without a required permission, it may, among other things, lead to that the investment or agreement must be terminated. The Danish Business Authority may initiate an investigation for up to 5 years from the completion of the transaction. Therefore, it is necessary to clarify whether an investment requires a permission.

Pre-screening is just as the mandatory screening carried out based on a request form, which is submitted to the Danish Business Authority. In the notification is it often an advantage to include specific information about the market in which the Danish company is active on. This gives the authorities a quick introduction to the area, which may be new to them. For instance, information about market shares is often relevant, as this information can be used to determine how significant the company in which the investment is made is in the Danish market.

Based on the request, the Danish Business Authority can provide a confirmation that the contemplated investment or agreement does not concern critical infrastructure or critical technology.

The pre-screening is typically used if the case of doubt points in the direction that the investment does not require a permission. The process takes 2- 3 weeks, which would be wasted if the investment under all circumstances must be notified according to the mandatory scheme subsequently.

Voluntary notification

Voluntary notification can only be used when:

1. An investment or agreement is made by a foreign investor, who is resident outside the EU and the EFTA, and who acquires at least 25 % of the shares and voting rights in a Danish company.
2. The Danish company is not active within the five sensitive sectors but may still have an impact on the national security and public order.

It is relevant to consider voluntary notification for these transactions, as the Danish Business Authority may initiate an investigation of the investment or agreement for up to 5 years from the completion of the transaction. Based on the investigation, the Danish Business Authority can demand that the investment or agreement is terminated if the Danish Business Authority finds that it constitutes a threat to national security or public order.

How does FDI screening proceed in Denmark?

An application for permission or pre-screening is made via an application or notification form to the Danish Business Authority.

The application must state the type of application and transaction in question and general details of the transaction. In addition, information must in all cases be provided on a number of specific market conditions for the market in which the Danish company is active. The information includes, among other things, an indication of the Danish company's largest competitors, as well as information about the products and/or services offered.

In the case of an application relating to a foreign investment, the foreign investor is obliged to provide a number of information about the investment itself, as well as the control as it entails.

For applications concerning special financial agreements, the foreign investor must state the type of agreement to which the application relates, including the purpose of the agreement, the detailed content of the agreement, and how control of the target company is achieved through the agreement.

For further information about the notification process, see our process overview here


Andreas Christensen

Partner (H)

Marie Løvbjerg

Director, Attorney

Vibeke Kristine Hammershøi

Junior Associate