Does the Business Transfer Act Apply If You Sell Shares?

"Do I need to follow the Business Transfer Act when I sell my company?" The answer depends entirely on how you structure the deal — and this is exactly where many sellers, and even advisors, get it wrong.

The act requires an actual change of employer

The Business Transfer Act applies to the transfer of a business, or an organizationally independent part of one, that results in employees getting a new employer. This — an actual change of employer — is exactly the core of whether the act applies.

Share purchase: the employer doesn't change

If you sell the shares in the ApS or A/S that's the employer, no change of employer happens in the sense of the act. The company — the legal entity the employees are employed by — remains the same. Only the ownership behind the company changes. That's why a pure share sale generally falls outside the scope of the Business Transfer Act. See the full distinction in our article on asset purchases vs. share purchases.

Asset purchase: the act typically applies here

If a new owner instead buys the business's assets — customers, equipment, inventory, goodwill — without taking over the company itself, that's a transfer of the economic activity to a new legal entity. This generally triggers an actual change of employer, and the Business Transfer Act therefore applies, with all its protections and obligations.

Does that mean employees are worse off in a share sale?

Not necessarily. In a share sale, employees simply continue employed by the same company as before, just with a new ownership group behind it — their employment, seniority and terms aren't affected by the change of ownership at all, because the employer is legally unchanged. The protection in the Business Transfer Act simply becomes redundant in that situation, because the problem the act addresses — the risk of deterioration on a change of employer — doesn't arise.

When can the line be less clear?

In practice, the line can be harder to draw for more complex deals — for example if an asset purchase is combined with a subsequent restructuring, or if only part of a business's activities are sold as assets while the rest continues unchanged. In such cases, get specific legal advice on whether the act applies to your particular deal, rather than assuming one way or the other.

Why does it matter to know the difference before listing the business for sale?

If you wrongly assume the act doesn't apply — when it actually does, because the deal is structured as an asset purchase — you risk, as seller or buyer, overlooking the duty to inform and negotiate, which can trigger claims from employees afterward. Conversely, an unnecessary assumption that the act applies to a pure share sale can create needless uncertainty and administrative work that wasn't actually required.

Frequently asked questions

Do I have to inform employees under the Business Transfer Act if I sell my shares?

Generally no, since a pure share sale doesn't result in a change of employer. You may still have good reasons to inform employees for the sake of good leadership and trust, even though it's not a legal requirement.

What determines whether my deal is an asset purchase or a share purchase?

It's determined by what's actually being transferred — the shares in the company (share purchase) or the specific assets and activities without the company itself (asset purchase). See the full distinction in our article on acquiring a business.

Can I choose myself whether the act applies?

No, it's determined by how the deal is actually structured — not by what the parties want or agree between themselves.

Unsure how your specific deal should be structured, and what it means for employees? Read the full walkthrough of the Business Transfer Act, or book a no-obligation call.