Jesper Fabricius and Rikke Sonne (Accura Law Firm) authored this publication

The Danish Investment Screening Act (DISA) applies to foreign direct investments and "special financial agreements". The DISA also applies to certain contracts relating to the Danish energy island in the North Sea. The DISA is administered by the Danish Business Authority (DBA).

Summary of major changes in 2024

• In 2024, the Danish Minister for Industry, Business and Financial Affairs approved a foreign investment in a Danish company after a new application process, as the investment was formerly blocked in 2023 under the DISA, making it the first blocked foreign investment in the history of the DISA.
• In 2024, the DISA was amended to introduce specific time periods for applying for approval of certain special financial agreements in connection with offshore wind tenders and other public energy projects tendered by the Danish Ministry of Climate, Energy and Utilities.
• In 2024, the DBA published some statistical information on the development of cases processed under the DISA between July 1, 2021 and June 30, 2023 on their website. The data gives an overall insight into the number of cases handled under the DISA during this period and the DBA's processing time for different types of cases.

Who files?

Foreign direct investments and certain special financial agreements are investments or agreements that are made or entered into by foreign investors or service providers, including: non-Danish citizens; companies not domiciled in Denmark, even if the company has a permanent establishment in Denmark; companies domiciled in Denmark if the company is a subsidiary 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 filing obligation concerning contracts relating to the energy island in the North Sea applies to all tenderers and contracting (and subcontracting) parties.

The filing obligation rests with the foreign investor, and filings must be made digitally to the DBA using the DBA's designated application forms.

The filing must include detailed information on the investment or agreement, the foreign investor and the Danish target company, including ownership structure charts of the foreign investor and of the Danish target company before and after the investment or agreement.

The submission of an EU notification form may be required for investments going into phase 2.

Types of deals reviewed

The filing obligation only relates to foreign direct investments in and special financial agreements with Danish entities operating within "particularly sensitive sectors or activities".  These include: the defense sector; IT security functions or processing of classified information; production of dual-use items; critical technology; and critical infrastructure.

Filing to the DBA is mandatory if the foreign investor directly or indirectly acquires at least 10 percent of the shares or equivalent control by other means. The obligation applies to all foreign investors, even in the EU and EFTA.

For special financial agreements, a filing obligation only applies to foreign investors domiciled outside the EU or EFTA, or where at least 25 percent of the shares or equivalent control by other means are held by non-EU/EFTA entities or citizens, meaning the entity is under significant influence from non-EU/EFTA parties.

The DBA may intervene even in investments in or special financial agreements with entities outside the particularly sensitive sectors or activities if the investment or agreement nevertheless poses a threat to national security or public order. This only applies if the foreign investor is domiciled outside the EU/EFTA or under significant influence from non-EU/EFTA entities or citizens. The risk of intervention may be avoided by a voluntary filing to, and approval from, the DBA.

Contracts relating to the Danish energy island in the North Sea are also subject to a filing obligation.

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.

It considers whether the Danish target operates within or influences the critical infrastructure sector; whether the target processes or has access to classified information or sensitive personal data; the 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.

When it comes to the foreign investor, the DBA considers whether the investor is directly or indirectly controlled by a foreign government, including foreign government agencies or armed forces of a third country, including through ownership or substantial financing. It also considers 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; or whether there is a serious risk that it will engage in or is involved in 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, for example, through the use of front companies.

The DBA will consult other relevant Danish authorities, EU Member States and the EU Commission when making the assessment.

Review process timeline

The review process timeline for Danish FDI filings is divided into two phases. Phase 1 begins once the DBA declares the foreign investor's application for approval to be complete, and it must be concluded within 45 calendar days. A phase 1 screening may result in approval or the opening of phase 2 proceedings.

If the DBA cannot approve the transaction within the prescribed deadline for phase 1 but sees a need for further investigation or information, it will initiate phase 2 proceedings. Phase 2 will not start until the DBA has declared that all the requested information has been submitted, and must be concluded within 125 calendar days from when the in-depth investigation was initiated.

A phase 2 screening may result in approval; a decision to negotiate terms with the foreign investor; or the application being submitted to the Minister for Industry, Business and Financial Affairs for a final decision. There is no formal deadline for the Minister's review.

How foreign investors can protect themselves

The scope of the DISA is very broad. In particular, the assessment of whether a Danish target may be considered to operate within the particularly sensitive sectors and activities requires a careful assessment of 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 operates within the sensitive sectors of critical technology or critical infrastructure. Pre-screening applications must be submitted digitally to the DBA, and a response from the DBA may generally be expected within one to two weeks. Pre-screening can only 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. The DBA tends to request a full filing if it cannot easily determine that the Danish entity is not operating in critical technology or critical infrastructure.

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.

The DBA has a duty to offer reasonable guidance to citizens and businesses. 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 may be expected.

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

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