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On 19 March 2019, the EU Regulation regarding the establishment of a framework for screening of foreign direct investments in the European Union was adopted (the “FDI Screening Regulation”). The FDI Screening Regulation did not in itself introduce any screening mechanisms in the Member States, nor did it impose an obligation on the Member States to establish any screening mechanism. Instead, the FDI Screening Regulation established a framework for coordinating screening mechanisms throughout the EU to protect sensitive European companies from foreign investments and influence.

The FDI Screening Regulation imposes an obligation on the Member States to share specific information about the foreign investments undergoing screening in a Member State, i.e., investments by investors residing in jurisdictions outside of the EU that may affect the security or public order within the EU. Furthermore, the framework establishes a right for the Commission to request information regarding foreign investments in a Member State not subject to screening. The FDI Screening Regulation therefore establishes a system, whereby the Member States and the Commission are allowed to present comments to ongoing investments in other Member States to which the receiving Member State is obligated to pay due consideration.

In order to establish the screening mechanism and procedures necessary to be able to screen and potentially block foreign investments within critical sectors in Denmark, and to be able to process any comments from Member States and/or the Commission under the FDI Screening Regulation, a general screening mechanism has been adopted in Denmark taking effect from 1 July 2021 with the Act on Screening a Foreign Investment (the “FDI Act”), which applies to all foreign investments closing after 1 September 2021. This article will describe the Danish regime and reflect on the practical administration of the FDI Act after its 1-year anniversary.

The FDI Act was introduced with the primary purpose to ensure that foreign investments in Denmark are screened on the grounds of national security and public order and to set the basis for a potential blocking or mitigating actions towards the foreign investment.

Fodnoter

The article examines the competence of the Board of Directors in Danish listed companies in connection with takeover bids to allow for the amendment of warrant terms, e.g. to permit transfer or early exercise. It is thus examined whether the Board of Directors may allow a potential bidder to acquire or exercise warrants, otherwise subject to restrictions or prohibitions on transfer and exercise, and thus reach the threshold necessary to complete a takeover bid and subsequent compulsory redemption. Further, the article examines other actions that could possibly be taken by the Board of Directors to facilitate a takeover bid, and the interests that the Board of Directors should protect and take into consideration. In addition to considering the provisions of specific takeover-legislation, the article also addresses the protection of individual rights under Danish law, and the reluctance by Danish courts to limit especially ownership rights. It is thus concluded that the shareholders and not the Board of Directors should decide on the acceptance of a takeover bid, and that a bidder wishing to obtain a majority sufficient for carrying out compulsory resolution, must do so by obtaining necessary acceptance from shareholders and not through decisions made by the Board of Directors.

In the USA, although still debated, the CFA Institute recognizes that in connection with investment analyzes etc. not only 1) significant publicly available knowledge, and 2) not significant publicly available knowledge, can be included but also 3) non-significant, not publicly available knowledge. By combining these three types of information, a “mosaic” emerges that provides a broader and thus better picture of a stock or an issuer. This approach is thus also referred to as the “mosaic theory”. In a Danish and European context, such a theory raises several issues, primarily of a capital market law nature under the Market Abuse Regulation (“MAR”), but also in relation to other areas of law, such as the regulation of trade secrets and confidentiality obligations. In relation to MAR, the relevant issues relate primarily to the definition of inside information and the associated prohibitions against unlawful disclosure and insider dealing. MAR does not contain a specific indication of how much non-publicly available information can be collected and whether this, when compiled, can be considered inside information. MAR also does not contain a requirement that the inside information, if such comes into existence, must originate from or be known at all by the issuer, provided the knowledge in question relates to the issuer or a financial instrument. In addition, MAR’s “safe harbor” provision with respect to research, estimates, and transactions based upon such, specifically states that the provision only applies if the research etc. is based on publicly available data. The aim of this article is to analyze whether the application of the mosaic theory in a Danish context can result in an investor or investment analyst through the collection and compilation of sufficient knowledge, including non-public data, can result in such person having acquired inside information as defined by MAR, and thus subject to the consequent restrictions. In this connection, it is considered whether the sources of the knowledge in question, and how this knowledge has otherwise been obtained, can be given importance in the assessment. It is concluded that application of the mosaic theory involving collection of non-public information, may result in the result itself being considered inside information, regardless of the source of information, and how this is obtained, triggering the prohibitions and restrictions under MAR.