General information on corporate governance

Definition of corporate governance

There is no statutory or official definition of corporate governance in Denmark. However, in its report of December 2001 aimed at listed companies, the corporate governance committee referred to below defined corporate governance as the goals according to which a company is managed, and the major principles and frameworks that regulate the interaction among the company's managerial bodies, owners, and other stakeholders. This definition is not the only one used, but it probably by and large reflects the views of most players and academics in the field.

The new Companies Act

Until recently, Danish limited liability companies were regulated by the Danish Public Companies Act and the Danish Private Companies Act, respectively. However, in 2006 the Minister of Economic and Business Affairs initiated a comprehensive corporate law reform. A committee was established and charged with modernizing company law in light of, among other things, the increased need to be able to adapt to the changing demands that result from globalization and competition among legal systems. In November 2008, the committee published its report (Report 1498/2008), which included a proposal for a new Companies Act (with explanatory notes) to replace the existing two acts. A bill was presented in March of 2009, and the new Companies Act (Act No. 470 of June 12, 2009) was passed in May of the same year. The Act includes only few changes compared to the proposal presented by the committee. As is the case with company laws in many other jurisdictions, the Companies Act does not use the term corporate governance (or similar Danish words), but nevertheless contains provisions that clearly are a part of the framework of rules associated with corporate governance.