The starting point in section 45 of the Danish Companies Act is that all shares in a limited liability company or private limited company – individually – have equal rights in the company. This means that each individual share/ownership share has the same rights as the others – as a starting point. However, it is possible to differentiate between the rights of the shareholders through a provision in the articles of association, where the shares are divided into capital classes.
Why do you want to divide shares into capital classes?
Capital classes are a way of distributing the value of shares to the owners while differentiating the rights in the respective capital classes. Typically, they are divided into A-, B- and possibly C-classes, which include the various values and rights of the shares in the capital classes.
Such a division can be used, inter alia, to add different classes of capital, different voting rights to general meetings, the right to demand at least a certain dividend and/or the right of first refusal of one class or the right to purchase shares in another class. There are many ways to differentiate the rights between the different classes.
Splitting the value of shares can be attractive if, for example, you want to bring in a passive investor, where you offer voiceless B-class shares, and in this way, you ensure that the ‘power’ to make decisions still lies with the desired capital owners, such as the CEO.
How do you divide capital classes?
The individual rights of the different capital classes must be stated in the articles of association of the limited liability company or private limited company. If the shares are not divided in advance, a proposal must be presented to the general meeting, where the proposal must be voted through.
Contact a specialist
Do you have questions about capital classes in joint stock companies and limited liability companies? Or if you have other commercial legal issues, you are more than welcome to contact us.
