Articles of association in ApS Company

Drafting a set of articles of association is imperative when establishing a company. These articles can be defined as regulations that prescribe the company's operations and establish the relationship between the company and its stakeholders.

The articles of association play a significant role in a company since as the owner, you are obliged to comply with their contents. Furthermore, the articles of association also apply to future owners who may acquire capital shares in the company.

The articles of association must contain certain mandatory information, including the name of the company and any secondary names, if applicable. A Danish private limited company is required to include the word „ApS” or „private limited company” in its name, and the name must be distinguishable from other companies registered in the CVR register. Additionally, if the company has more than 5 bin names, a fee of DKK 1,000 per extra bin name must be paid. The name of the company must not be misleading or easily confused with a public authority.

Purpose of the company: The articles of association must detail the company's purpose, such as operating a restaurant or cafe. The company can only engage in business activities that fall within the ambit of the purpose specified in the articles of association.

Size of the company's capital: The articles of association must also indicate the company's capital amount at the time of its formation. This pertains to the initial sum of money invested in the company during its establishment.

Capital shares: The articles of association must specify the quantity of capital shares and their corresponding nominal value.

Rights for the capital shares: This section should outline the rights associated with the ownership shares, such as the voting rights each share holds during general meetings.

Management bodies: This section of the articles of association should outline the management structure of the company, including the requirement for at least one board of directors. If the company is founded by a single individual, then they will typically serve as the sole board member.

General meeting: The articles of association must include a description of how the company notifies and convenes a general meeting. This could be done through various means, such as posting on the company's website or intranet.

Financial year: The financial year for an ApS must be 12 months long and usually starts from the day the foundation document is signed. The annual accounts must also comply with the requirements set by the Accounting Act and be properly booked.

Special resolutions: This section should detail the procedure for passing special resolutions at the general meeting. These resolutions may involve decisions on matters like increasing the company's capital. At the bare minimum, the process for amending the articles of association should be stipulated.

Termination date for the company: The articles of association of LLC in Denmark (ApS) must specify if the company has a finite lifespan, such as when it must be dissolved after accomplishing a specific objective. These are the compulsory prerequisites for the articles of association of an ApS.

Stated differently, the articles of association must contain the mandatory requirements and cannot be excluded. Nonetheless, there are other discretionary items that may be included in the articles of association. If these items are not included, the relevant provisions in the Companies Act will apply.

The articles of association can also include optional content, such as the subscription right. If the company has a subscription right agreement, it must be included in the articles of association. The subscription right allows certain individuals to enter into agreements on behalf of the company. The Companies Act already allows a member of the executive board or board of directors to sign for the company externally, but the subscription right can further regulate this by limiting who can sign externally, such as only allowing the company director to do so.

Co-sale obligation: In case the majority shareholder of a company decides to sell their shares, they may require the other shareholders to sell their shares under the same conditions.

Decision-making capacity: It is feasible to stipulate a prerequisite for a minimum number of board members to be in attendance for decisions to be made on behalf of the company.

Electronic general meeting: This is the section where you can outline if the general meeting can be conducted through electronic methods and, if yes, the modality of its conduct.

Amendments to the articles of association: If there is a need to modify one or more articles of association of a company, it must be done at a general meeting. After that, the new articles of association should be registered with the Danish Business Authority, similar to the registration process of the initial articles of association when the company was established.

Only matters that relate to the company itself should be included in the articles of association. Terms that are specific to the relationship among the owners are typically included in an owner's agreement, which is explained in more detail below.