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9 May 2023

New Guidance from the Danish Business Authority on Companies’ Indemnification of Management and Board

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Introduction

  • In recent years, Danish companies’ have steadily increased their focus on indemnification of its management against damages and costs in connection with third-party claims against the individual members of the executive management and board of directors.
  • Due to increasingly complex national and European regulation as well as claimants’ wider access to judicial review through class-action lawsuits and litigation funding, Danish companies have turned their attention to Directors and Officers Insurance (“D&O-insurance”) and corporate indemnification resolutions in order to attract and retain qualified individuals to management. Due to rising insurance premiums along with extensive focus on management liability, indemnification by the company has become more common and has been adopted as an alternative or supplement to D&O-insurances.
Consequently, within the last years, a majority of the companies comprised by the Nasdaq Copenhagen C25 index have adopted resolutions of management indemnification at their general meetings. Until now, it has been debated whether companies under Danish law could validly adopt a resolution of general and broad indemnification of its board of directors. In a Danish Business Authority guidance note from 13 April 2023, the possibility to adopt such has been clarified, providing firmer legal basis for such resolutions being relied on and considered valid.

Thomas Enevoldsen

Senior Associate

+45 30 37 96 88

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Nils Nissen Homann

Associate

+45 30 37 96 68

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