It has come to our attention that it can sometimes be difficult to distinguish between the types of ownership registration and the types of enterprises covered by the specific registration of ownership. We have also found that many enterprises have overlooked the requirement to register beneficial owners of existing enterprises which should have been done by 1 December 2017.
Registration of legal owners (The Public Register of Major Shareholders)
The types of enterprises obliged to register legal owners are as follows: IVS, ApS, A/S, P/S and C/S (where the general partner is a limited liability enterprise or the like).
Registration of legal owners appears from the Danish Companies Act, pursuant to which a legal owner is a natural or legal person who holds more than 5% of the votes or shares in an enterprise. The relevant legal owner must therefore notify the enterprise when their ownership of shares or votes exceeds the following thresholds: 5, 10, 15, 20, 25, 50, 90, 100%. If the thresholds of 1/3 or 2/3 are exceeded, this must also be recorded and communicated to the enterprise.
When founding one of the relevant forms of enterprises, the registration of legal owners is now mandatory in connection with the founding.
If one fails to register the legal owners in The Public Register of Major Shareholders, there is a risk that the enterprise will be transferred for compulsory dissolution.
Registration of beneficial owners
The Order on Beneficial Owners came into force on May 23, 2017, after which point existing enterprises were required to register beneficial owners no later than December 1, 2017. The registration of beneficial owners is a direct consequence of the implementation of the Fourth Money Laundering Directive and the Government's tax haven package from December 2014.
There are many other forms of enterprises which are obligated to register their beneficial owners. Sole proprietorships, branches and listed enterprises are among those exempted from the requirement. Conversely, general partnerships and limited partnerships as well as limited liability enterprises must register their beneficial owners.
Always a natural person
A beneficial owner is always a natural person who ultimately, whether directly or indirectly, controls a sufficient share of the voting rights or shares in the enterprise in question. Finally, one may also be a beneficial owner if one exercises control over the enterprise in other ways (e.g. through the articles of association or other agreement).
Registration in the registry of beneficial owners thus always requires the identification of a natural person who meets the criteria for being a beneficial owner. As a rule, a person will be a beneficial owner if said person holds 25% or more of the votes or shares, but smaller holdings may also be sufficient if control is exercised in other ways.
Of course, the possibility that no person meets the criteria for being a beneficial owner exists. In these cases, the enterprise may report that there are no beneficial owners, whereby the management of the enterprise is automatically registered as the beneficial owner.
Thus, the enterprise is required to identify any natural persons in the circle of owners or elsewhere in the organisation, who meet the criteria for being a beneficial owner of the Danish enterprise.
Sanctions on the way - Amendment of the Danish Companies Act in 2018
In December 2017, a draft bill to amend the Danish Companies Act, the Consolidation Act on Certain Commercial Enterprises and the Act on Commercial Foundations was sent into consultation. The bill is to be processed in parliament in the spring of 2018, with an expected entry into force on 1 July 2018. The bill contains the specific change that the Danish Business Authority will be given authority to transfer enterprises for compulsory dissolution if they fail to register beneficial owners.