Private placement rules and law in Denmark

1. Summary of private placement provisions for fund interests (if applicable)

The AIFMD has been implemented in Denmark through the Danish AIFM Act (“AIF Act”) and ancillary executive orders (“Danish AIFM Rules”). None of the Danish AIFM Rules define the term “private placement” and there is no private placement exemption under the Danish AIFM Rules in the sense that a fund may be marketed to investors in Denmark without prior approval. Accordingly, alternative investment funds may not be marketed in Denmark unless and until a marketing approval has been obtained from the Danish Financial Supervisory Authority (the “DFSA”) in accordance with the AIF Act. 

Consequently, provided that the AIF has been notified correctly, it may only be marketed in Denmark in accordance with the AIF Act. The AIF may also be marketed by a bank or investment company with a license in its EU home country which have been passported to conduct cross-border investment services in Denmark provided that the AIF has been notified correctly in accordance with the AIF Act. This applies irrespective of whether the fund is marketed to professional or retail investors.  

‘Marketing’ is defined in accordance with AIFMD Article 4(x) as meaning “a direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM”. 

The AIF Act distinguishes between professional investors and retail investors. A professional investor is defined as an “investor which is considered to be a professional client or may, on request, be treated as a professional client within the meaning of Annex II to MiFID”. 

To be able to market funds to retail investors, an AIFM must obtain a separate approval from the DFSA in addition to the approval to market funds to professional investors. Funds marketed to retail investors have to comply with several additional burdensome requirements as set out in Executive Order no. 1553 of 19 December 2022 (as amended).  

The scope of the AIFM Act is wide and captures most fund structures. However, operational companies and funds that qualify as UCITS are not subject to the Danish AIFM Rules. 

Moreover, the following entities are exempted from the AIF Act and are therefore not subject to the marketing restrictions, including but not limited to: 

  1. holding companies
  2. institutions for occupational retirement provision
  3. supranational institutions
  4. national central banks
  5. AIFMs that manage AIFs where the only investor is the AIFM
  6. national, regional and local governments and bodies or other institutions which manage funds supporting social security and pension systems
  7. employee participation schemes or employee pension schemes
  8. securitisation special purpose entities
  9. family owned investment units
  10. joint ventures

2. Other forms of possible placement options for fund interests outside fund regulations

As set out in the definition of marketing, marketing to or investments made by the investor on the investor’s own initiative (reverse solicitation) is not governed by the AIF Act and is therefore permitted without registering the AIF for marketing in Denmark. A pre-marketing definition was introduced 1 July 2021 in Denmark for EEA AIFMs. The Danish FSA has in its Q&A on, inter alia, AIFMs and UCITS stated that the pre-marketing regime is not available for non-EEA AIFMs. This means that no pre-marketing is permitted in Denmark by non-EEA AIFMs 

3. Consequences of non-compliance with placement regimes for fund interests

Pre-marketing and Marketing of AIFs in violation of the Danish AIFM Rules is a criminal offence and may be punished by a fine and revocation of any approval to market a fund in Denmark. Despite potential non-compliance with the AIF Act contracts entered into with investors will generally be interpreted in accordance with existing Danish contractual law and will be considered valid. Investors may hold the AIFM liable for any losses suffered as a result of non-compliance.

4. Private placement rules for non-fund investments available

Generally, any public offering of securities (which includes shares, notes and other financial instruments) is subject to a prospectus requirement. However, the prospectus rules include several exemptions including in respect of offerings of securities to: 

  1. professional investors or eligible counterparties exclusively, 
  2. fewer than 150 non professional investors per Member State within the EU/EEA, 
  3. investors which acquire securities equal to a minimum of EUR 100,000, or 
  4. securities with a denomination of a minimum of EUR 100,000 per security. 

A ‘professional investor’ is an investor that is considered to be a professional client or may, on request, be treated as a professional client within the meaning of MiFID II Annex II.