FDI Screening: When a Foreign Investor Wants to Buy a Danish Business

Note: This article describes Danish foreign direct investment screening rules specifically.

Your buyer is ready, the price is negotiated — but can the deal even be completed without regulatory approval first? If the buyer is foreign, the answer may be no. Since 2021, foreign investors in certain cases need permission from the Danish Business Authority before they can invest in or acquire a Danish business.

Short answer: The rules are called FDI screening (Foreign Direct Investment) or investment screening. A foreign investor wanting to acquire at least 10% of the ownership shares or voting rights in a Danish business within one of the "particularly sensitive" sectors needs to apply for permission from the Danish Business Authority before the investment is completed.

Which industries are covered?

The rules primarily target businesses working with defense equipment, dual-use products (civilian/military), IT security, critical infrastructure (energy, transport, telecommunications), and certain critical technologies.

What if my business isn't in a sensitive industry?

Most ordinary Danish SMEs fall outside the mandatory scheme. For industries other than the particularly sensitive ones, there's a voluntary notification scheme — but it should always be clarified early if a buyer is foreign, rather than assuming it's irrelevant.

What does it mean for the process?

If the deal is covered, it can't be completed before the Danish Business Authority has approved the investment — in certain cases after involving the Minister for Industry, Business and Financial Affairs. Like with merger control, this adds a conditional period between signing and closing, which needs to be factored into the deal's timeline.

When should you look into it?

If your potential buyer is a foreign company or a foreign investor, the question should be clarified as soon as there's a specific buyer in play, ideally as part of the initial letter of intent. Clarifying it early avoids unpleasant surprises late in the process.

Source: Danish Business Authority.