The Danish Act on Undertakings Carrying on Business for Profit

Consolidation Act no. 546 of 20 June 1996 –
At present in
force

The Danish Act on Undertakings Carrying on Business for
Profit

(Consolidation Act)

(Bekendtgørelse af lov om
erhvervsdrivende virksomheder)

Arrangement of Sections

  • Part 1 Scope
    and definitions
  • Part 2 Name
    and powers of procuration of the undertaking
  • Part 3
    Registration and legal personality
  • Part 4
    Delivery of particulars for registration, and publication
  • Part 5 Annual
    accounts and auditing of limited liability undertakings
  • Part 6
    Dissolution
  • Part 7 Penalty
    provisions etc.
  • Part 8
    Commencement provisions etc.

An act to consolidate Act no. 123 of 18 February 1994, as amended
consequential on Act no. 377 of 22 May 1996.

Part 1 Scope and definitions

1.(1) This Act shall apply to undertakings whose objects are to promote
the financial interests of the undertaking’s members through business carried on
for profit.

(2) For the purposes of this Act, undertakings means sole traders,
partnerships, limited partnerships, co-operatives (co-operative societies) and
other limited liability businesses and societies to which the Companies Act (Aktieselskabsloven), the Private Companies Act (Anpartsselskabsloven) or the Act on Foundations Carrying on Business for Profit (Lov om
erhvervsdrivende fonde) do not apply. Branches of similar foreign
undertakings are also governed by this Act.

(3) Under this Act, an undertaking is deemed to carry on business for
profit where it

1) passes on goods or copyright, provides services or the like for which the
undertaking normally receives consideration, or

2) carries on business by selling real property or letting real property on
rent, or

3) has the relationship with a public or private limited company set out in
section 2 (2) of the Companies Act (see subsections (4) and (5) thereof)
or with another undertaking carrying on the business set out in paragraph (1) or
(2) above, or

4) exercises a dominant influence over another undertaking pursuant to
statutes, bylaws or articles or by agreement and has a considerable share in
its operating profit or loss without having the relationship set out in
paragraph (3) above with the other undertaking.

2.(1) For the purposes of this Act, a partnership means an
undertaking in which all members are personally and jointly and severally
liable, without limitation, for the debts and obligations of the undertaking.

(2) For the purposes of this Act, a limited partnership means an
undertaking in which one or more members, the general partners, are personally
and jointly and severally liable, without limitation, for the debts and
obligations of the undertaking, whereas one or more members, the limited
partners, have limited liability for the debts and obligations of the
undertaking.

(3) Except for the provisions of Parts 1, 2 and 7, this Act shall not
apply to sole traders, partnerships and limited partnerships.

3. For the purposes of this Act, a limited liability undertaking means an
undertaking in which none of the members are personally and jointly and
severally liable without limitation.

4. For the purposes of this Act, a co-operative (a co-operative society)
means an undertaking governed by section 2 (1) or (2), or by section 3, whose
objects are to help promote the common interests of the members through their
participation in the business activities as buyers, suppliers or in any other,
similar way, and whose profit, other than normal interest on the paid-up
capital, shall either be distributed among the members in proportion to their
share of the turnover or remain undistributed in the undertaking.

5.(1) This Act shall not apply to

  • Undertakings which have obtained approval pursuant to section 60 of the
    Act on Municipal Administration (Lov om kommunernes styrelse),
  • Undertakings governed by the provisions of the Merchant Shipping Act (Søloven) about shipping partnerships, and
  • Undertakings supervised by the Danish Financial Supervisory Authority (Finanstilsynet) or any similar supervisory authority within the
    European Union or in countries with which the European Union has concluded a
    co-operation agreement.

(2) The Commerce and Companies Agency (Erhvervs- og
Selskabsstyrelsen) may determine that an undertaking or specific types of
undertakings shall be exempt in whole or in part from the provisions of this
Act.

Part 2 Name and powers of procuration of the
undertaking

6.(1) For the purposes of this Act, the name of an undertaking means the
name under which the undertaking exercises its business or any part of such
business, and which is applied when signing for the undertaking.

(2) The names of undertakings shall differ clearly from each other.
The name of an undertaking must not include surnames, names of companies,
foundations or businesses, specific names of real property, trade marks, logos,
etc., that do not belong to the undertaking, or anything which may be confused
therewith.

(3) The name of an undertaking must not be likely to mislead. It must
not include any specification of businesses which have no connection with the
business activity carried on by the undertaking. If the name describes a
specific business activity, it must not be used in an unchanged form if the
nature of the business activity changes significantly.

(4) Partnerships, limited partnerships and co-operatives (co-operative
societies) may use those designations, or abbreviations thereof, in their names.
None others may use these designations, or designations which may be confused
therewith.

(5) Where anyone retires as a liable member of an undertaking, his name may
be retained in the name of the undertaking if the permission of the person
concerned or his heirs has been obtained.

(6) The name of a limited liability undertaking shall contain information
about the limitation of liability. The only abbreviation permitted for limited
liability co-operatives shall be »A.M.B.A.«.

(7) The provisions of subsections (1) to (6) above shall apply
correspondingly to the secondary names of undertakings. When secondary names are
used, the principal name of the undertaking shall be added in brackets.

(8) A branch name of a foreign undertaking shall include the word »filial«
(branch) and clearly indicate the nationality of the undertaking.

7.(1) Power(s) of procuration can be granted only by the fully liable
member(s) or by the management body which, according to the statutes of the
undertaking, have powers to do so. The person authorised to sign for the
undertaking shall be entitled to do so in all matters pertaining to the
operations of the undertaking and to bind the undertaking. The person authorised
to sign for the undertaking shall not be entitled to dispose of or mortgage real
property of the undertaking without being specifically authorised to do so.

(2) Powers of procuration may be granted to more than one person, to the
effect that they can only be exercised jointly (joint powers of
procuration).

(3) Powers of procuration cannot be limited with effect in relation to third
parties, other than as provided in subsection (2) above.

(4) A person entitled to sign for an undertaking cannot transfer his power of
procuration to another.

(5) Powers of procuration can be revoked from time to time. The death of the
principal shall not lead to revocation of the power of procuration.

Part 3 Registration and legal personality

8. (1) The board of directors, management board or similar management
body of limited liability undertakings (see section 3) shall deliver for
registration particulars of the undertaking to the Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen).

(2) The branch manager of a branch of a foreign limited liability undertaking
shall deliver for registration particulars of the branch.

9. (1) A limited liability undertaking which has not been registered with
the Commerce and Companies Agency cannot acquire rights or incur debts
and obligations as an undertaking, Nor can it be a party to legal proceedings
other than lawsuits concerning its formation.

(2) Anyone who has incurred, before the registration, an obligation or has a
share in such an obligation will be personally and jointly and severally liable,
without limitation, for any such obligation incurred on behalf of the
undertaking. Upon registration, the undertaking shall take over the obligations.

(3) If an agreement has been made before the registration of a limited
liability undertaking, and if the other contracting party knew that the
undertaking had not been registered, such other contracting party shall, unless
otherwise agreed, be entitled to treat himself as discharged from all further
contractual obligations if the particulars for registration have not been
delivered prior to the expiration of the time limit set out in section 10 (2),
or if registration is refused. If the other contracting party was unaware that
the undertaking had not been registered, such party shall be entitled to treat
himself as discharged from all further contractual obligations as long as the
undertaking has not been registered.

Part 4 Delivery of particulars for registration, and
publication

10. (1) The Commerce and Companies Agency (Erhvervs- og
Selskabsstyrelsen) shall keep a register of undertakings which have been
registered pursuant to this Act.

(2) Particulars for registration pursuant to section 8 shall reach the
Commerce and Companies Agency not later than eight weeks after the formation of
the undertaking or after the obligation to deliver particulars for registration
starts to apply to the undertaking. The particulars delivered for registration
shall include a copy of the undertaking’s statutes.

(3) In the register shall be entered information about the names and
addresses of the members of the board of directors, of the management board or
similar management body, and about which persons are authorised to sign for the
undertaking. Information about the undertaking’s name, address, the municipality
in which its domicile is situated and its financial year shall likewise be
entered in the register. Where the undertaking is governed by section 18, the
auditor’s name shall also be entered in the register.

(4) If the notification concerning the formation of an undertaking has not
been delivered prior to the expiration of the time limit set out in subsection
(2) above, registration cannot take place.

(5) Where an undertaking which has been entered in the Register of
Associations (Registeret for Foreninger) under the Act on the
Associations Register (Lov om Forenings-Registeret) is registered with
the Commerce and Companies Agency under this Act, the undertaking shall be
struck off the Register of Associations once publication under section 14 of
this Act has taken place.

10 a. (1) The time limits fixed in or in pursuance of this Act shall be
in force from and including the day after the day of the event that released the
time limit. This shall apply to the calculation of time limits in terms of
dates, weeks and years.

(2) Where a time limit is stated in terms of weeks, the time limit
shall expire on the same day of the week as the day on which the event that
released the time limit took place. See subsection (1) above.

(3) Where a time limit is stated in terms of months, the time limit shall
expire on the date of the month on which the event that released the time limit
took place. See subsection (1) above. If the day on which the event that
released the time limit took place is the last day of a month, or if the time
limit expires on a non-existing day of a month, the time limit shall always
expire on the last day of a month, irrespective of the length of the month.

(4) Where a time limit is stated in terms of years, the time limit shall
expire on the anniversary of the date when the event that released the time
limit took place. See subsection (1) above.

(5) Where a time limit expires on a weekend, a public holiday, the Danish
Constitution day (5 June), Christmas Eve or New Year’s Eve, the time limit shall
be extended to the following weekday.

11.(1) If the statutes of the undertaking are altered or if any other
circumstance changes, about which particulars have been delivered, such altered
particulars must, in the absence of any provision to the contrary in this Act,
be delivered to the effect that the Commerce and Companies Agency (Erhvervs-
og Selskabsstyrelsen) shall have received them not later than four weeks
from the date on which the alteration or change was adopted. If the statutes of
the undertaking are altered as regards domicile, or if any changes are made to
the board of directors, management board or similar management body of the
undertaking, or if a new auditor is appointed, the Commerce and Companies Agency
must have received such particulars within two weeks from a resolution to this
effect has been passed.

(2) If an undertaking is no longer governed by this Act, see section 1 (1)
and no solvent liquidation is undertaken, see section 20, particulars to that
effect shall be delivered under subsection (1) above. The particulars shall
enclose a declaration prepared by a state-authorised public accountant or a
state-authorised registered accountant to the effect that the undertaking is
undoubtedly solvent. The Commerce and Companies Agency shall strike the
undertaking off the register once such a declaration has been received.

12. The Commerce and Companies Agency may demand any information
necessary to determine whether this Act is being observed.

13.(1) Registration may be refused if the particulars delivered for
registration are not in compliance with this Act, with the undertaking’s
statutes or regulations made under this Act.

(2) Where the particulars delivered cannot be registered because of errors or
omissions, the Commerce and Companies Agency may fix a time limit for
rectification. Registration may be refused where no such rectification occurs
within the time limit fixed.

(3) The applicant delivering the particulars for registration shall be
notified in writing that registration has been refused and of the reason for
such refusal.

14.(1) Registrations under this Act and receipt of a declaration
pursuant to section 19 (6) shall immediately be published in the registration
gazette. Registrations, declarations pursuant to section 19 (6) and particulars
received, with exhibits, shall be available for inspection by the public.

(2) Third parties shall be deemed to have knowledge of anything which has
been published in the registration gazette. The provision of the first clause of
this subsection shall not be applicable to transactions which have been made
prior to the 16th day following the publication if any third party proves that
he has not had the opportunity to acquire knowledge of the published
matters.

(3) As long as no publication has occurred in the registration gazette,
matters which must be submitted for registration and which must be published
cannot be contended in relation to third parties save where documentation is
provided to the effect that such third party has had knowledge thereof. The fact
that such matters have not yet been published, shall not prevent any third party
from relying upon the matters.

(4) In the event of any disagreement between the contents of the publication
in the registration gazette and the contents of the register of limited
liability undertakings, the undertaking cannot rely upon the published text in
relation to any third party. Such third party can, on the other hand, rely upon
the published text in relation to the undertaking save where it is proved that
the said party was familiar with the contents of the register.

15. The Agency may determine that registration and receipt of a
declaration under section 19 (6) shall take place via the Agency’s computerised
information system at the same time as or instead of in the registration
gazette. Information published on the computerised information system shall be
considered to have come to the knowledge of third parties and shall have the
same legal effect in all respects as any publication in the registration
gazette.

16.(1) The Commerce and Companies Agency shall stipulate
rules relating to the delivery of particulars for registration, and
registration, etc., under Parts 3 and 4. The Commerce and Companies Agency may
stipulate rules to the effect that such particulars delivered for registration
and any documents to be filed in connection therewith may be exchanged
electronically, including be delivered to the Agency, in a standardised form as
prescribed by the Agency. Such electronic documents are legally equivalent to
paper-based documents. The Commerce and Companies Agency may stipulate rules as
to which matters applicants delivering the particulars or others may themselves
register in the Agency’s computer system, and as to the use of the system.

(2) Registrations made in accordance with the rules issued in pursuance of
the fourth clause of subsection (1) above shall replace the filing of
particulars for registration. Section 11 shall also apply to such
registrations.

(3) The Commerce and Companies Agency may stipulate rules relating to fees
for particulars delivered for registration, fees to be paid for transcripts,
copies of documents relating to undertakings, publication and for the use of the
Agency’s computer system. The Commerce and Companies Agency may stipulate rules
relating to the payment of an annual fee for its receipt of annual accounts etc.
and for their publication and for services for which no specific fees have been
fixed. The Agency may stipulate fees for reminders in case of late payment.

(4) Following registration according to rules stipulated in pursuance of the
second and fourth clauses of subsection (1) above, the Commerce and Companies
Agency may up to five years from the date of the registration demand submission
of documentation showing that the particulars delivered for registration or the
registration is lawful. See section 13 (1).

17.(1) Where anyone believes that a registration is detrimental to
him, the question of deleting such registration shall be decided by the courts
of law. Actions to this effect shall be instituted against the undertaking
within six months of the publication of the registration. The court shall send a
transcript of its judgment to the Commerce and Companies Agency (Erhvervs- og
Selskabsstyrelsen). A note concerning the outcome of the case shall be
entered, free of charge, in the register of undertakings registered pursuant to
this Act, and publication shall take place. See section 14.

(2) Other decisions made by the Commerce and Companies Agency under the
provisions of this Act or regulations issued in pursuance of this Act may be
delivered to the Company Appeals Board of the Ministry of Business and Industry (Erhvervsministeriets Erhvervsankenævn) not later than four weeks after
the decision has been communicated to the relevant party.

(3) The decision made by the Commerce and Companies Agency pursuant to
section 12 and decisions made as a consequence of the time limits stipulated in
sections 10 and 13 relating to the fixing of time limits under section 13 (2)
being exceeded, and decisions under sections 20 and 21 (1), may not be submitted
to a higher administrative authority.

Part 5 Annual accounts and auditing of limited liability
undertakings

18. The Consolidation Act on the Presentation of Financial Statements by
Certain Companies (the Company Accounts Act) (Lov om visse selskabers
aflæggelse af årsregnskab m.v., Årsregnskabsloven) shall apply to limited
liability undertakings with any variations that might follow from the special
circumstances of such undertakings. The Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen) shall stipulate more specific rules in
that respect.

19.(1) Limited liability undertakings which, at the balance sheets
date, do not exceed any two of the limits set out in subsection (2) below, may
dispense with applying section 18.

(2) The limits referred to in subsection (1) above are

  • total assets of DKK 4 million
  • net turnover of DKK 10 million; and
  • an average number of 10 full-time employees during the financial
    year.

3) Subsection (1) above shall not apply where the undertaking is a member of
a group, if any one of the members of the group or the group as a whole exceeds
any two of the limits set out in subsection (2) above.

(4) Total assets under subsection (2) above shall be calculated as the sum of
the items stated under assets or of the items stated under fixed assets and
current assets, computed in compliance with the Company Accounts Act. The
average number of full-time employees shall be calculated according to the
regulations laid down pursuant to section 178 of the Companies Act (Aktieselskabsloven).

(5) Where an undertaking or a group, see subsection (3) above, is governed by
the provision of subsection (1) above, that provision shall apply until any two
of the three limits set out in subsection (2) above have been exceeded at the
balance sheet date in three consecutive financial years. Where an undertaking or
a group, see subsection (3) above, is not governed by the provision of
subsection (1), that provision shall not apply until any two of the three limits
set out in subsection (2) above are no longer exceeded at the balance sheet day
in three consecutive financial years.

(6) Where an undertaking meets the conditions of subsection (1) above, see
subsections (2) to (5) above, the board of directors, the management board or
the similar management body shall make a declaration to that effect and such
declaration shall be received by the Commerce and Companies Agency not later
than six months after the end of the financial year.

Part 6 Dissolution

20. Part 14 of the Companies Act with any variations that might be
required in consideration of the special nature of the undertakings shall apply
to the solvent liquidation of limited liability undertakings.

21.(1) The Commerce and Companies Agency may decide that limited
liability undertakings shall be dissolved by the insolvency court if the
undertaking does not have the management prescribed by its statues, or if it
fails to submit in due time to the Agency the declaration pursuant to the second
clause of section 11 (2), or section 19 (6), or annual accounts, etc., in a form
which accords with the Company Accounts Act and fails to remedy these defects
prior to the expiration of a time limit determined by the Agency.

(2) Such compulsory dissolution shall be effected pursuant to the provisions
of section 117 of the Companies Act with any variations that might be
required in consideration of the special nature of the undertakings.

Part 7 Penalty provisions etc.

22. Where members of the board of directors, the management board or the
similar management body fail to comply in due time with the obligations in
relation to the Commerce and Companies Agency (Erhvervs- og
Selskabsstyrelsen) imposed on them by this Act or by provisions determined
under this Act, the Agency may impose daily or weekly fines on the persons
concerned as a sanction, and execution may be levied to ensure payment of such
fines without first obtaining the usual basis of enforcement.

23.(1) Unless a more severe penalty is applicable under the Criminal Code (Straffeloven), any person who violates the provisions of subsections
(3); (4), second sentence; and (6) to (8) of section 6, and of sections 8, 10
(2) and sections 11 and 12 shall be liable to a fine.

(2) Regulations issued under this Act may provide for fines to be imposed on
any violation of those regulations.

(3) Where a violation has been committed by a company, an association, a
foundation or the like, the fine may be imposed on that legal person as a legal
person. Where the violation has been committed by the State, a municipality or
an inter-municipal establishment founded by local authorities according to a
co-operation agreement, see section 60 of the Act on Municipal Administration (Lov om Kommunernes Styrelse), the fine may be imposed on the State, the
municipality or the inter-municipal establishment.

Part 8 Commencement provisions etc.

24. The Company Accounts Act (Lov om visse selskabers aflæggelse af
årsregnskab m.v.), see Consolidation Act no. 662 of 12 August 1993, shall be
amended as follows:

1. Insert in section 1 a as subsection (4):

»(4). Partnerships and limited partnerships which are governed by
subsection (1) shall be registered under section 8 and sections 10 to 17 of the
Act on Undertakings Carrying on Business for Profit (Lov om erhvervsdrivende
virksomheder). The Commerce and Companies Agency (Erhvervs- og
Selskabsstyrelsen) may determine more specific rules as to which particulars
shall be registered concerning these undertakings.«

2. Section 62 b (1) is repealed.

Subsection (2) accordingly becomes subsection (1).

25. (1) This Act shall come into force on 1 January 1995.

(2) At the same time Act no. 23 of 1 March 1889 on Registers of Business
Names, Firms and Powers of Procuration (Lov om handelsregistre, firma og
prokura) shall be repealed.

(3) Particulars and documents which have been registered with or notified for
registration to the registers of business names not later than 31 December 1994
shall until 1 July 1995 be available for inspection with the provincial chief of
police, in Copenhagen with the Corporation of Copenhagen.

26.(1) Particulars for registration of limited liability
undertakings and branches of similar foreign undertakings which exist at the
time when this Act comes into force, shall be delivered to the Commerce and
Companies Agency (Erhvervs- og Selskabsstyrelsen) prior to 1 July 1995.

(2) Section 6 (6), first clause, and section 9 of this Act shall not apply to
existing undertakings.

(3) Names of undertakings registered on or before the date of coming into
force of this Act in the registers of business names, and particulars of which
are delivered to the Commerce and Companies Agency for registration can,
notwithstanding section 6 (2) be registered with the Commerce and Companies
Agency and be used with the same rights as before.

27. A limited liability undertaking existing on or before the date of
coming into force of this Act may apply the provisions of section 19 (1) to (4)
provided that it, at the end of the first financial year commencing on 1 January
1995 or later, does not exceed any two of the limits fixed in section 19 (2).

28. (1) A limited liability undertaking which exists on or before the
date of coming into force of this Act and is a parent undertaking may apply the
provisions of section 2 c of the Company Accounts Act (Årsregnskabsloven) provided that the group, at the end of the first financial year commencing on 1
January 1995 or later, does not exceed any two of the limits fixed in section 2
c (1).

(2) A limited liability undertaking may apply the provisions of Part 9 a of
the Company Accounts Act provided that it, at the end of the first financial
year commencing on 1 January 1995 or later, does not exceed any two of the
limits set out in those provisions.

(3) A limited liability undertaking existing on or before the date of coming
into force of this Act may, for financial years ending not later than 31
December 1998,

  • dispense with applying the provisions of the Company Accounts Act in
    respect of the calculation of and the statement in the balance sheet of
    depreciation of plant and machinery and other fixtures and fittings, tools and
    equipment,
  • apply tax depreciation and write-downs and other valuations where this
    practice has hitherto been applied by the undertaking, subject to disclosure
    in a note to the accounts of the approximate amount by which such policy has
    affected the profit or loss for the year in relation to valuations pursuant to
    the Company Accounts Act.

(4) Where the purchase price or production cost of a fixed asset
cannot be determined without unreasonable expenses or within a reasonable time
when the first annual accounts are being prepared under or pursuant to the
Company Accounts Act, the residual balance at the beginning of the year may be
deemed to be the purchase price or production cost. Application of this
provision shall be disclosed in the notes to the accounts.

(5) The corresponding amounts for preceding years may be left out in
the first annual accounts prepared under or pursuant to the Company Accounts Act
where adjustment of the figures of the annual accounts of the last preceding
year can only be effected at considerable expenditure of money and time.
Application of this provision shall be disclosed in the notes to the accounts.

29. This Act shall not extend to the Faroe Islands and Greenland but may
by Royal Decree be extended to those parts of the Kingdom of Denmark subject to
such modifications as circumstances peculiar to the Faroe Islands and Greenland
may require.

Act no. 377 of 22 May 1996

(Simplification of the Presentation of Accounts and Time Limits, the Second
Phase of the Legislative Process in Respect of State Public Limited Companies
and Electronic Exchange of Data) (Forenkling af regnskabsaflæggelse samt
frister, 2. fase af lovgivningen vedrørende statslige aktieselskaber og
elektronisk dataudveksling m.v.)

Contains commencement provisions such as:

14

Section 14 (1) provides that the Act shall come into force on 1 June 1996.
From section 14 (2) it appears that provisions such as section 3 (9) which
regards an amendment of section 19 (6) of the Act on Undertakings Carrying on
Business for Profit (Lov om erhvervsdrivende virksomheder) shall have
effect from 1 February 1996.

17

(1) This Act shall not extend to the Faroe Islands and Greenland.

(2) Sections 1 to 4 may by Royal Decree be extended to the Faroe Islands
subject to such modifications as circumstances peculiar to the Faroe Islands may
require.

(3) Sections 1 to 4 and 6 to 10 may by Royal Decree be extended to Greenland
subject to such modifications as circumstances peculiar to Greenland may
require.

Ministry of Business and Industry, 20 June 1996

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