A new Act, in force from 1.7.2021 and applicable to investments and agreements completed from 1.9.2021, introduces a mandatory and a voluntary foreign investment screening mechanism to protect Denmark against investments which may pose a threat to national security or public order. All foreign direct investment - including by companies domiciled in Denmark, EU or an EFTA country which are under the control or significant influence of nationals from a country outside the EU or EFTA or by companies, resident in a country outside the EU or EFTA - in particularly sensitive sectors and activities (e.g. defense sector, IT security functions or processing of classified information,production of dual-use items, critical technology, critical infrastructure companies) is subject to mandatory authorisation. A voluntary notification regime applies to non-EU/EEA investment of 25% of shares, voting rights or similar control by other means in other sectors.
"Chapter 1 - Purpose, scope and definitions
§ 1. The purpose of this Act is to prevent foreign direct investments and special economic agreements from constituting a threat to national security or public order in Denmark, through screening and any interference with such investments and agreements.
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§ 2. This Act applies to foreign direct investments and special financial agreements made or entered into by foreign nationals. However, Sections 7, 10 and 11 do not apply to nationals of EU and EFTA countries.
PCS. (2) This Act also applies to foreign direct investments and special financial agreements made or concluded by the following, cf. 3 and 4:
1) Companies that are not domiciled in this kingdom. This also applies even if the company has a permanent establishment in Denmark.
2) Companies domiciled in Denmark if the company is a subsidiary or a branch of a company that is not domiciled in this kingdom.
3) Companies domiciled in Denmark if a foreign citizen covered by subsection 1 or a company that is not domiciled in this kingdom has control over or significant influence over it.
PCS. 3. Notwithstanding paragraph. §§ 7, 10 and 11 do not apply to companies domiciled in an EU or EFTA country, provided that the company is not under the control or significant influence of nationals of a country outside the EU or EFTA or of companies, resident in a country outside the EU or EFTA.
PCS. 4. Notwithstanding subsection 2, the Act applies to foreign direct investments and special economic agreements made or entered into by a company domiciled in Greenland or the Faroe Islands, if foreign nationals or companies domiciled outside the kingdom have control or significant influence over the company.
PCS. 5. The Minister of Business and Industry may, after consultation with the Minister of Finance, the Minister of Foreign Affairs, the Minister of Justice, the Minister of Climate, Energy and Utilities and the Minister of Defense, lay down rules that this Act applies to foreign direct investment and special economic agreements made by legal entities. . 2-4, if the investment or agreement may pose a threat to national security or public order.
§ 3. This Act applies to foreign direct investments in and special financial agreements with companies domiciled in Denmark.
PCS. 2. In addition, the Act applies to the establishment of new companies in Denmark within particularly sensitive sectors or activities covered by section 6.
PCS. (3) The Minister of Business and Industry may, after negotiation with the Minister of Finance, the Minister of Foreign Affairs, the Minister of Justice, the Minister of Climate, Energy and Utilities and the Minister of Defense, lay down rules that this Act applies to foreign direct investment in and special economic agreements with other Danish entities. 1, if the investment or agreement may pose a threat to national security or public order.
§ 4. For the purposes of this Act:
1) National security: Matters concerning Denmark's territorial integrity and the survival of the population. Threats to national security include actions that constitute or could pose a risk of disturbing international relations, the nations' peaceful coexistence or Danish military interests, and actions that intend to cause damage to Denmark, including crimes against the state's independence or crimes against the state constitution and the supreme state authorities.
2) Public order: Matters concerning Denmark's ability to maintain an independent, democratic and secure society, without the circumstances thereby affecting national security.
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Chapter 2 - Authorization for foreign direct investment and special economic agreements in particularly sensitive sectors and activities
§ 5. A foreign investor who intends to make a foreign direct investment by acquiring a qualified share in a company domiciled in Denmark within particularly sensitive sectors and activities covered by § 6, must apply in advance to the Danish Business Authority for permission for the investment.
PCS. 2. Direct possession or control of at least 10 per cent is considered a qualifying share. of the ownership interests or voting rights or equivalent control by other means.
PCS. 3. When calculating ownership interests or voting rights, shares from group-affiliated companies or closely related persons are included, as well as warrants and call options for investments that can currently be exercised or converted.
PCS. 4. Stk. 1-3 shall apply correspondingly to an increase in the share, which means that after the acquisition it will constitute or exceed a limit of 20 per cent, one third, 50 per cent, two thirds or 100 per cent, respectively. of the ownership interest or voting rights in the Danish company.
PCS. 5. Stk. 1-3 apply correspondingly to the establishment of new companies.
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§ 6. Particularly sensitive sectors and activities in relation to national security or public order as mentioned in § 5, para. 1, and § 7, para. 1, includes the following:
1) Companies in the defense sector.
2) Companies in the field of IT security functions or processing of classified information.
3) Undertakings producing dual-use items as defined in § 2 (1) of Council Regulation (EC) No 428/2009 of 5 May 2009, as amended.
4) Companies in critical technology other than Nos. 1-3.
5) Critical infrastructure companies.
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Chapter 3 - Notification of other foreign direct investment and special economic agreements relevant to national security or public order
§ 10. A foreign investor who is not covered by the exceptions in § 2, para. 1, 2nd sentence, and para. 3, may submit a notification to the Danish Business Authority of an intended or implemented foreign direct investment if the investment may constitute a threat to national security or public order and the foreign investor directly or indirectly obtains possession of or control over at least 25 per cent. of the ownership interests or voting rights in a company domiciled in Denmark or equivalent control by other means.
PCS. 2. When calculating ownership interests or voting rights, shares from group-affiliated companies or closely related persons are included, as well as warrants and call options for investments that can currently be exercised or converted.
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§ 13. If the Danish Business Authority finds that a foreign direct investment or a special financial agreement notified in accordance with §§ 10 or 11 does not constitute a threat to national security or public order, the Danish Business Authority approves the investment or agreement.
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§ 14. If the Danish Business Authority receives a presumption that a foreign direct investment or special financial agreement, which is covered by §§ 10 or 11, but which has not been notified to the Danish Business Authority, may constitute a threat to national security or public order, the Agency may decide to initiate an investigation for up to 5 years from the implementation of the investment or agreement. § 12, para. 3-5, and § 13, para. 1-3, shall apply mutatis mutandis.
Chapter 4 - Decision criteria
§ 15. In assessing whether a foreign direct investment or a special financial agreement pursuant to this Act and rules issued pursuant thereto may constitute a threat to national security or public order, in relation to the Danish company, the investment or the agreement, all relevant circumstances and available information shall be taken into account, including the following criteria:
1) Whether the Danish company operates within or affects critical infrastructure.
2) Whether the Danish company processes or has access to classified information or sensitive personal information.
3) The Danish company's position in the Danish market, including opportunities for substitution.
4) Whether the Danish company belongs to the defense industry or produces products with dual use or other critical technology of importance to national security or public order.
5) Whether the Danish company deals with the supply of critical raw materials, including energy, and food safety.
PCS. 2. In assessing whether a foreign direct investment or a special economic agreement pursuant to this Act and rules issued pursuant thereto may constitute a threat to national security or public order, in relation to the foreign investor, all relevant circumstances and available information, including the following criteria:
1) Whether the foreign investor is directly or indirectly controlled by a foreign government, foreign government agencies or foreign armed forces, including through ownership or substantial financing.
2) Whether the foreign investor is or has been involved in activities affecting security or public order in an EU Member State or in other friendly and allied countries.
3) Whether there is a serious risk that the foreign investor participates in or has relationships with illegal or criminal activities of importance to national security or public order.
4) Whether there are indications that the foreign investor is deliberately trying to circumvent the screening rules, e.g. through the use of straw man-like company constructions. [...]" (Investment Screening Act (No. 842 of 10/05/2021), in force 1.7.2021, applies to foreign direct investment and special financial agreements implemented from 1.9.2021, §§ 1-6, 10 and 13-15 [google translation])
Investment Screening Act (No. 842 of 10/05/2021), in force 1.7.2021, applies to foreign direct investment and special financial agreements implemented from 1.9.2021, §§ 1-6, 10 and 13-15
[<a href="https://www.retsinformation.dk/eli/lta/2021/842">Act</a>]