For the first time, the Danish Minister of Business and Industry has relied on the rules set out in the Investment Screening Act to refuse foreign investment, as the Minister did not allow NKT's divestment of NKT Photonics to a Japanese enterprise. Further, the first parliamentary hearing of a bill proposing an extension of and important amendments to the Investment Screening Act was completed on
The Danish Investment Screening Act (investeringsscreeningsloven) took effect on
Under this Act, foreign investors are obligated to apply for the
The Business Authority will then decide whether to authorise the investment or the particular financial agreement. The Business Authority may also state the terms/remedies subject to which it will authorise the foreign investment or the special financial agreement to be executed.
If the Business Authority finds that the foreign investment or the special financial agreement constitutes a threat to national security or public order, and that the threat cannot be mitigated by agreeing on terms/remedies for the investment or the agreement, the Business Authority will present the application or notification to the Minister of Business and Industry.
The Minister of Business and Industry will then consult on the matter with the
Since the rules were introduced, the Minister of Business and Industry has not - until now - publicly rejected any application for authorisation of a foreign investment or a special financial agreement.
NKT not allowed divestment of NKT Photonics
However, it has now been announced that the Minister of Business has refused to authorise a foreign investment, as the listed Japanese enterprise
However, this was not made public by the Minister of Business but by NKT, who in their company announcement no. 13 on
Obviously, the specific elements that caused the Minister of Business and Industry to find that the divestment of NKT Photonics to the Japanese enterprise would pose a threat to national security or public order are unknown.
Comments by Bech-Bruun
As far as we know, this is the first FDI rejection in
It illustrates the Danish authorities' tightened control with foreign investment within particularly sensitive Danish sectors. Consequently, investors carefully must consider potential restrictions on foreign investments at an early stage in the transaction when pursuing investment opportunities involving Danish entities. Similarly, sellers of Danish entities should perform a risk assessment of the potential buyers before concluding any binding agreement.
1. Hearing of bill on extension of the Investment Screening Act.
On
However, based on critical consultation responses, the government decided to restrict the contemplated extension of the Investment Screening Act when the bill was introduced on
However, the introduced bill still includes the original proposal for introduction of new process for the case handling, which will see the screening and authorisation procedure divided into two stages. It is our assessment that this structure will contribute positively to shorten the processing times of uncomplicated applications and notifications.
On
Bech-Bruun continuously follows the hearings of the bill and developments in the area.
Originally published
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ms
Bech-Bruun
Radhuspladsen 4
DK 1550
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