Companies Act for entrepreneurs: key rules

You have formed your ApS, got a CVR number and are ready to do business. But what actually happens when the Companies Act says something you have not complied with? What do you risk as a director if the company acts wrongly? And when are your personal finances actually at risk?

The Companies Act is the legal foundation on which all limited companies in Denmark, that is ApS and A/S, are built. Yet most entrepreneurs only know the surface: that you must have DKK 20,000 in share capital and hold a general meeting once a year.

This guide gives you the overview you actually need, not as a lawyer, but as a business owner.

Note: This guide gives a general overview of the Companies Act as at 2026 for information purposes. It does not replace individual legal advice. If you have complex situations, you should consult a lawyer or accountant.

What is the Companies Act?

The Companies Act (the Act on public and private limited companies) is the central law that governs private limited companies (ApS) and public limited companies (A/S) in Denmark. It brings together the rules on:

• Formation and registration of limited companies
• Capital matters, that is requirements for the share capital and its preservation
• Management, that is the rights and duties of the executive management and the board
• General meetings and the shareholders' rights
• The annual report and accounts
• Dissolution, merger and demerger of companies

The Companies Act applies to both company forms, but with different requirements. If you understand the core principles, you have a far better foundation for running your company correctly.

The Companies Act's capital requirements

ApS: at least DKK 20,000

A private limited company requires a share capital of at least DKK 20,000 on formation. The capital can be paid in cash or as a contribution in kind (assets).

But the share capital is not just a formation requirement; it also has ongoing significance. The Companies Act contains a rule on loss of capital: if the company's equity falls below half of the registered share capital, the management has a duty to act.

In practice this means that if your ApS is formed with DKK 20,000 and the equity falls below DKK 10,000, the management must ensure that a general meeting is held at the latest 6 months after the loss of capital is established, and account for the company's situation and for any measures (section 119 of the Companies Act). If the management fails to do so, it can incur liability.

A/S: at least DKK 400,000

A public limited company requires at least DKK 400,000 in share capital. This is one of the main reasons why the vast majority of entrepreneurs choose an ApS, and it is rarely relevant to form an A/S from the start, unless the company is part of a complex capital structure or plans a stock-exchange listing.

The share capital does not protect you, but the creditors

A common misunderstanding is that the share capital acts as a buffer for the owner. It does not. The share capital is instead a guarantee to the company's creditors that a certain amount of capital is present in the company. It is the owners' limited liability that protects you against creditors, not the share capital itself.

Management in limited companies

The executive management: the day-to-day responsibility

All ApS companies must have at least one director. The director is responsible for the day-to-day management of the company and must act within the framework set by the articles and any board.

The Companies Act imposes requirements on the director's actions:

• The director must act in the company's interest, not in the owner's personal interest
• The director has a duty to keep informed about the company's finances
• The director is responsible for the company's accounts and bookkeeping being correct
• The director must not carry out dispositions that are clearly to the company's detriment

The director and the owner are often the same person in an owner-managed ApS. That gives flexibility but does not change the legal obligations: the director still acts on the company's behalf and bears the responsibility for the management.

Board and supervisory board: optional for an ApS

An ApS is not required to have a board. Most single-owner ApS companies run with an executive management alone. But the Companies Act allows a board or a supervisory board to be added if the articles provide for it.

If you have co-owners or investors who want oversight and influence without sitting in the day-to-day management, a board can be the right solution. The board sets the overall framework and supervises the executive management but does not run the day-to-day operations itself.

For an A/S, stricter requirements apply: an A/S must always have either a board and an executive management or a supervisory board and an executive management.

Conflicts of interest

An important principle in the Companies Act is the rules on disqualification. A director or board member who has a personal interest in a decision must not take part in the handling of the matter in question.

Example: If the director wants to sell their private property to the company, the director is disqualified in that decision. The decision must instead be made by the other management members, or by the general meeting if the director is the only manager.

The general meeting: the owners' highest authority

The general meeting is the highest decision-making body in a limited company. Here the shareholders make the formal decisions that the management cannot take on its own initiative.

The Companies Act requires at least one ordinary general meeting a year. It must be held in good enough time that the approved annual report can be filed with the Business Authority within the deadline in the Financial Statements Act, which for most companies is 5 months after the end of the financial year. At the ordinary general meeting, the annual report is approved.

In addition, an extraordinary general meeting can be convened if:

• The management considers it necessary
• Shareholders who together own at least 5% of the share capital request it
• The company's equity has fallen below half of the share capital

Voting rights and majority requirements

Most decisions at a general meeting require a simple majority (more than 50%). But the Companies Act requires a qualified majority (at least 2/3 of both the votes cast and the capital represented) for, among other things:

• Amendments to the articles
• Dissolution of the company
• Merger or demerger
• Certain capital changes

It is decisive for owners with minority shares to know these rules. An owner with more than 1/3 of the votes can in many cases block decisions that require a 2/3 majority.

Liability: what do you risk as an owner?

Limited liability is the core advantage of running a business in company form. But it is not absolute.

The clear rule

As a shareholder in an ApS, you are liable only with your contributed capital. If you have contributed DKK 20,000, that is normally the maximum amount you risk losing as an owner, regardless of how large the company's debt becomes.

The exceptions, where the protection disappears

There are situations where you can nonetheless become personally liable:

1. Personal guarantees. If you have given a personal guarantee to a bank or a supplier, you are personally liable for the amount you have guaranteed. The guarantee is not limited to the company's capital.

2. Mixing of finances. If you use the company's money for private expenses or vice versa without correct documentation, a court can in serious cases disregard the company's separate status. This is called piercing the corporate veil. It is a narrow exception that is very rarely applied in Danish law, but it exists.

3. Unlawful withdrawals of capital. If you withdraw money from the company as salary or dividend beyond what you can lawfully take, you can be required to return the amount. This applies especially if the company is insolvent or on its way to becoming so.

4. Criminal liability for fraud or gross negligence. The company form does not exempt you from criminal liability. If the director or owner commits fraud, money laundering or grossly negligent acts, there can be personal criminal liability.

Director's liability: an underrated risk

Many entrepreneurs underrate the personal liability that comes with the role of director. The Companies Act provides that a director who intentionally or negligently causes the company, the shareholders or a third party a loss can incur personal liability for damages.

Specific situations that can trigger liability

Continued operation while insolvent. If the director lets the company continue operating even though the company is insolvent and genuinely hopeless and cannot pay its creditors, it can trigger personal liability for the debt incurred after the so-called point of hopelessness. It is one of the most frequent causes of management-liability cases in Denmark.

Missing bookkeeping. The Bookkeeping Act requires ongoing, correct bookkeeping. If the director fails to ensure this, it can in itself be an act that incurs liability.

Unlawful loans to shareholders. A shareholder loan (a loan from the company to the owner) is only lawful under strict conditions in section 210 of the Companies Act, and regardless of its lawfulness it is taxed at the recipient as salary or dividend under section 16 E of the Assessment Act. If the loan is unlawful, it must be repaid with interest, and the management can incur liability.

Failure to react to a loss of capital. As mentioned, the management has a duty to act if the equity falls below half of the share capital. If the management does not react, it is a potential liability-incurring passivity.

The most common company-law mistakes entrepreneurs make

1. A shareholder loan, where you borrow from the company without realising it

One of the most dangerous traps for owners of single-owner ApS companies is treating the company's bank account as their personal account. "I'll just take a little out now and pay it back" is a classic situation, but it is a shareholder loan that both the Tax Agency and the Companies Act treat seriously. The consequence is taxation of the amount as salary or dividend and in many cases also a breach of the Companies Act.

2. No documentation for general-meeting decisions

Many entrepreneurs with single-owner ApS companies never hold a real general meeting and never write minutes. Legally, this is a problem, because the Companies Act's requirements for a general meeting and minutes are not just formalities but documentation that decisions have been lawfully made. If you distribute a dividend without a general-meeting decision, for example, the distribution is contrary to the Companies Act.

3. Articles that are never updated

Many companies still run on articles that were drawn up at formation and never changed, even though the company's activities, ownership or capital structure have changed significantly. Outdated articles can create disputes and make it hard to document the company's legal position.

4. A missing owners' agreement in partnerships

The Companies Act governs what happens at a general meeting, but it does not govern the relationships between the owners in detail. An owners' agreement is a private agreement that supplements the articles: who decides what, what happens if an owner wants to sell, and who owns the IP rights? If the owners' agreement is missing, the Companies Act's default rules apply, and they rarely fit the parties' actual intentions.

5. Management and owner are mixed together

In an owner-managed ApS, it is tempting to regard "me" and "my company" as the same. Legally, they are two separate entities. Contracts are entered into by the company, not by the owner personally, and creditors have claims against the company, not the owner personally. Do not mix them.

6. Failure to register beneficial owners

The Business Authority requires all companies to register their beneficial owners (typically owners with more than 25% of the ownership shares or votes). If you fail to update this registration on a change of ownership, it can lead to fines and administrative problems.

Company law and the documents that support it

The Companies Act sets the framework, but it is your legal documents that fill it in in practice. The most important:

Document	Purpose
Articles of association	The company's constitution, governing purpose, capital, management and the general meeting
Owners' agreement	Governs the owners' mutual relationship (supplements the articles)
Director's contract	Sets out the director's terms and powers
General-meeting minutes	Document lawfully made decisions
Annual report	Mandatory reporting of accounts to the Business Authority

The Companies Act in practice: what should you prioritise?

You do not need to read all of the Companies Act's many sections. But these five principles should be firmly in place:

1. Capital is not just a formation requirement. Keep an eye on the size of the equity relative to the share capital.
2. Director's liability is real. You can be sued personally for errors in the management.
3. The general meeting is mandatory, and the decisions must be documented.
4. Separate the company's and your private funds, always and without exception.
5. Beneficial owners must be registered, and the registration must be updated on any change of ownership.

Conclusion

The Companies Act is not something you need to know by heart, but you should know the core principles of capital, management liability, the general meeting and liability. Make sure your basic documents (articles, owners' agreement, director's contract and minutes) are in place and up to date, and keep the company's finances sharply separate from your private ones. Then you stand far stronger the day things come to a head.

---

The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer or accountant for advice on your specific situation.