Capital classes

In a Danish limited liability company, all equity shares will have the same rights – however, this can be changed by dividing them into different classes of capital. In such a situation, the rights of the equity shares will depend on their membership in a particular class. Typically, classes of capital are divided into Classes A and B, where Class A has more voting power than Class B. Sometimes there is also a class C, which has the least value.

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The division into capital classes is used to give classes different rights, such as, for example, different voting rights at general meetings, a minimum required share of profits or the possibility of priority or the right to purchase the capital shares of another class. There are many ways to differentiate rights between classes.

Value splitting of equity shares can be beneficial when a company seeks a passive investor. In this situation, it can offer him, for example, Class B shares without voting rights, so that control of decisions remains in the hands of selected equity owners, such as the managing director.

The rights of the different equity classes must be specified in the articles of association, with a description of the differences between the different classes and how large these classes are. If the capital shares have not been previously divided, the proposal for the division must be presented at the general meeting and approved by a vote.