Jesper Fabricius and Rikke Sonne (Accura Advokatpartnerselskab) authored this publication

The Danish Investment Screening Act (DISA) was entered into force on July1, 2021 and applies to foreign direct investments and "special financial agreements" (certain specified supplier, operating or service agreements and cooperative agreements on R&D) made or entered into on or after September 1, 2021. The DISA is administered by the Danish Business Authority (DBA).

Recent updates

There has been no evaluation of or changes to the DISA or the Executive Orders in 2022. There have also not been any official guidelines issued by the DBA in 2022.

Who files 

Foreign direct investments and certain special financial agreements are investments/agreements that are made or entered into by the following foreign investors/service providers (Foreign Investor(s)):

• Non-Danish citizens
• Companies that are not domiciled in Denmark (even if the company has a permanent establishment in Denmark)
• Companies domiciled in Denmark if the company is a subsidiary or a branch of a company not domiciled in Denmark; or
• Companies domiciled in Denmark if a non-Danish citizen or a company not domiciled in Denmark has control over or significant influence on it

The Foreign Investor is responsible for digitally filing to the DBA, using the forms made available on the DBA's website.

The Foreign Investor must provide detailed information regarding the nature of the investment/agreement, the Foreign Investor and the Danish target company.

In addition to the application/notification form, the following documents must be submitted to the DBA:

• Ownership structure chart of the Foreign Investor
• Ownership structure chart of the Danish target company before and after the investment/agreement (a chart after only applies to investments)
• EU-notification form (if the transaction concerns an investment pursuant to the DISA Section 5 or Section 10) and
• Contracts, declarations of intent or other documents confirming the validity of the transaction

Types of deals reviewed 

The DISA distinguishes between foreign direct investments in and certain special financial agreements with Danish entities that operate:

• Within certain particularly sensitive sectors or activities. In this area of business, prior approval from the DBA is mandatory if the Foreign Investor directly or indirectly acquires or controls at least 10 percent of the ownership shares or voting rights or equivalent control by other means in the Danish target. In terms of investments, this scheme applies to all Foreign Investors. In terms of certain special financial agreements, this scheme only applies to Foreign Investors domiciled or controlled outside the EU/EFTA (Mandatory Application Scheme)
• Outside the particularly sensitive sectors or activities. In this area, notification is voluntary but should be considered (i) if an investment/agreement is made or entered into by a Foreign Investor domiciled or controlled outside the EU/EFTA; (ii) the investment leads to direct or indirect possession of or control over at least 25 percent of the ownership shares or voting rights or equivalent control by other means in the Danish target; and (iii) the investment could pose a threat to national security or public order in Denmark. The DBA may initiate an investigation up to five years after completion of an investment/agreement covered by this scheme if the investment/agreement could pose a threat to national security or public order and has not been approved (Voluntary Notification Scheme).

Particularly sensitive sectors and activities include: 1) companies in the defense sector; 2) companies in the field of IT security functions or the processing of classified information; 3) companies producing dual-use items; 4) companies within the critical technology sector; and 5) companies within the critical infrastructure sector.

Scope of the review 

When assessing whether a foreign direct investment or a special financial agreement may constitute a threat to national security or public order, the DBA will take all relevant circumstances and available information into account with respect to the Danish target and the Foreign Investor, including, inter alia, the following criteria:

The Danish target

• Whether the Danish target operates within or influences the critical infrastructure sector
• Whether the Danish target processes or has access to classified information or sensitive personal data
• The Danish target's position on the Danish market, including opportunities for substitution
• Whether the Danish target belongs to the defense industry, produces dual-use items or other critical technology of importance to national security or public order and
• Whether the Danish target deals with supply of critical raw materials, including energy and food safety

The foreign investor

• Whether the Foreign Investor is directly or indirectly controlled by a foreign government, including foreign government agencies or foreign armed forces of a third country, including through ownership or substantial financing
• 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
• Whether there is a serious risk that the Foreign Investor will engage in or has relationships to illegal or criminal activities significant to national security or public order and
• Whether there are indications that the Foreign Investor is deliberately trying to circumvent the screening rules, e.g., through the use of front companies
• The DBA will consult with other relevant Danish authorities, EU Member States and the EU Commission when assessing whether a foreign direct investment or a special financial agreement may constitute a threat to national security or public order in Denmark.

Review process timeline 

Within the Mandatory Application Scheme, the DBA has 60 business days from receipt of a complete application to decide whether or not the DBA will approve the investment/agreement or whether the investment/agreement must be submitted to the Minister of Business for further consideration. The DBA may extend the deadline to 90 business days, e.g., if the case requires further investigation. If the DBA exceeds these deadlines, it does not prima facie entitle the Foreign Investor to complete the investment/agreement. If the investment/agreement is submitted to the Minister for approval, there is no deadline for the Minister's approval. In practice, uncomplicated transactions are approved within 35 to 45 business days from the submission of a complete filing.

Within the Voluntary Notification Scheme, a notification may be made at any time, before or after completion of the investment/agreement. The DBA has 60 business days from receipt of a complete notification to decide whether or not the DBA will approve the investment/agreement or whether the investment/agreement must be submitted to the Minister of Business for further consideration. If no decision has been made by the DBA within the 60 business days, the investment/agreement is considered approved. The 60 business days deadline may be extended.

How foreign investors can protect themselves

The scope of the DISA is very broad. In particular, the assessment of whether a Danish target can be considered to operate within the particularly sensitive sectors and activities requires a careful assessment and thorough insight into the target's business activities.

A pre-screening option is available, allowing a Foreign Investor to get a fast-track assessment from the DBA as to whether a Danish entity falls within the sensitive sectors of critical technology or critical infrastructure. This option still requires a digital application to the DBA with information on the Danish target as well as on the Foreign Investor. The information required for the application is limited, and a response from the DBA can generally be expected with two to three weeks. Pre-screening is only available to determine whether a Danish entity falls within the sensitive sectors of critical technology or critical infrastructure, not whether it falls into any of the other sensitive sectors and activities, and the DBA tends to request a full filing if it cannot easily determine if the Danish entity is not operating in critical technology or critical infrastructure.

It should be noted that the DISA also applies to a Foreign Investor's investment in targets outside Denmark, if the target has a Danish subsidiary operating within the particularly sensitive sectors and activities, and the Foreign Investor indirectly acquires at least a 10 percent interest in the Danish entity.

The DBA has a duty to offer reasonable guidance to citizens and businesses that are or may be subject to the DISA. Although the scope of this duty is relatively opaque, the DBA is generally quite forthcoming in rendering informal guidance on the application of the DISA. If circumstances are sensitive, however, very little upfront guidance can be expected.

There are no fines for not complying with the DISA. As regards foreign investment in ownership shares, the main sanction is that the Danish authorities may request that the foreign investor dispose of its investment —or in the alternative—may repeal any voting rights on such ownership shares. Depending on the circumstances, this could potentially end up in the Danish target being dissolved. As regards special financial agreements, these may eventually become null and void.

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