In 2016, the Parliament of Greenland, Inatsisartut, decided that the Danish Companies Act was to enter into force for Greenland. The Act will enter into force by Order as of 1 July 2018. This means that Greenlandic companies will operate under the same terms as those applicable to Danish companies in the Danish Companies Act from 2010.
The Companies Act will enter into force instead of the Greenlandic private companies act and the Greenlandic public companies act, respectively, which will make it easier to get an overview of the legislation applicable in future. In addition, the Companies Act contains a number of innovations in respect of the private and public companies acts applicable so far in Greenland providing Greenlandic companies with more options. This, among other things, includes:
i) New duty of registration
In future, companies must register the owners holding more than 5% of the company’s total capital or voting rights in the Danish public register of major shareholders with the Danish Business Authority. This requirement also applies to existing Greenlandic companies and will apply concurrently with the register of shareholders, which the company already keeps. As a general rule, the registration must be made before 1 July 2018 when the Act enters into force.
As from 1 January 2018, Greenlandic companies have had to be registered in the Central Business Register (CVR) just as Danish companies. In this connection, the Greenlandic Business Register (GER) was closed down and all Greenlandic companies automatically had their GER numbers converted into CVR numbers.
When the Companies Act enters into force for Greenland, the changes made in Greenlandic companies will be registered online in the CVR register in the same way as for Danish companies.
ii) Lower capital requirements for private limited companies
Greenlandic companies will now get the possibility of setting up a private limited company with a capital of DKK 50,000 instead of the capital requirement applicable until now of DKK 125,000.
iii) Option of partial payment of the share capital
The currently applicable Greenlandic private companies act and public companies act included a requirement that all of the capital had to be paid up in full in connection with establishment and any subsequent capital increase. It will now be possible to effect partial payment of the share capital with a minimum of 25% of the nominal share capital (however with a minimum of DKK 50,000). The remaining 75% must subsequently be paid up when the company is in need of the funds.
iv) Setting up an entrepreneurial company (IVS)
With the Companies Act it will now become possible to set up entrepreneurial companies with an initial capital of DKK 1 in Greenland. Thereby, the barriers for entrepreneurs to set up a business will be lowered also in Greenland.
v) New governing body – the supervisory board
In future, it will be possible for Greenlandic companies to choose a new management structure. Until now, it has only been possible to operate with a board of directors and a management board. The Companies Act makes it possible to set up a supervisory board instead of a board of directors.
vi) Possibility of non-voting shares
It will now become possible to introduce non-voting shares in public limited companies. The possibility of unlimited difference in the right to vote varies from the rules in the currently applicable public companies act in which the difference in the right to vote cannot exceed a ratio of 1:10. When the Companies Act enters into force, this restriction will be deleted.
vii) Shareholders' agreements (for public and private limited companies) not binding on the company
The Companies Act contains an express provision that shareholders' agreements are not binding on the company. Thereby, doubts no longer exist as to this issue in Greenland.
However, this does not mean that owners of companies cannot or should not enter into shareholders' agreements, but it should – as is the case for Danish companies – be considered carefully whether one or several aspects could or should be governed in the articles of association in order to safeguard the enforcement possibilities also in respect of the company. Shareholders in Greenlandic public and private limited companies should therefore consider whether the companies’ articles of association and any shareholders' agreements for the companies should be adjusted to the Companies Act.
PARTS OF THE ACT NOT IN FORCE FOR GREENLAND
Parts of the Companies Act will not enter into force for Greenland, including the provisions of cross-border mergers and demergers (Part 16).