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New requirements to store company documents from the turn of the year

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Legal news
calendar 21 December 2020
globus Denmark

A new control package from the government, which will be effective as of the 1 January 2021, contains, amongst others, a new requirement for Danish companies to store certain company documents for a minimum of five years. If the company does not comply with the requirement, the company’s management may risk being fined, and, in a worst-case scenario, the company may risk being forcibly dissolved.

Parts of the so-called “control package” will be effective as of the 1 January 2021. The control package consists of several new rules that all aim to strengthen the company and accounting control. The control package contains changes to, amongst others, the Danish Companies Act, the Danish Financial Statements Act, the Auditors Act and the Business Enterprises Act.

Requirement to store documents for a minimum of five years

From the financial year beginning from the 1 January 2021 or later, Danish companies governed by the Danish Companies Act must store their company documents in accordance with the new requirements. One of these requirements entails that the documents must be stored for a minimum of five years from the end of the financial year in which the documents were made.

The requirement to store documents for a minimum of five years also applies to the companies that are regulated by the Business Enterprises Act. However, sole proprietorships are excluded from these new requirements.

What documents must be stored?

The term “company documents” applies to the documents and appendices that companies are obliged to produce in accordance with the Companies Act. This is a broad definition which includes founding documents, articles of association, rules of procedure, minutes of general meetings, ownership documentation, shareholders’ ledger, and documentation of payment of share capital et cetera.

The requirement to store the documents applies not only to the documents that the company produces itself but also to those provided by external advisors, such as accountants and lawyers. Furthermore, the demand also applies to appendices produced voluntarily such as documents of an economic or accounting nature.

Companies covered by the Business Enterprises Act must, to a large extent, store the same type of documents.

How must the documents be stored?

The documents must be stored in such a manner that they, without difficulty, can be made available to public authorities. Companies may store the documents in both a physical and electronic manner, however it is not a requirement that the original document are stored. If the company stores the documents physically, they must be stored in Denmark.

It is important to keep in mind that the rules also apply to a company that ceases to exist, for example in the case of liquidation or resolution by declaration. In these cases, it is thus still necessary to store the documents for a number of years following the close down.

Risk of fines and forced dissolution

In case of lacking or inefficient storage of company documents, the company’s management can be punished with a fine and, in the worst-case scenario, the Danish Business Authority may choose to forcibly dissolve companies that do not follow the rules.

IUNO’s opinion

IUNO recommends that the management in all danish companies consider how they will ensure compliance with the new requirements.

It is especially important that the management ensures that the company documents are stored in a safe and sound manner. If the documents are stored electronically, IUNO recommends that backups are continually made, also for documents stored in the cloud. For documents stored physically, IUNO recommends that measures are taken to ensure that the documents are safe from fire hazards, theft and so on.

[Act amending the Danish Financial Statements Act, the Companies Act, the Act on Certain Business Enterprises, the Auditors Act and various other acts as of 19 May 2020]

Parts of the so-called “control package” will be effective as of the 1 January 2021. The control package consists of several new rules that all aim to strengthen the company and accounting control. The control package contains changes to, amongst others, the Danish Companies Act, the Danish Financial Statements Act, the Auditors Act and the Business Enterprises Act.

Requirement to store documents for a minimum of five years

From the financial year beginning from the 1 January 2021 or later, Danish companies governed by the Danish Companies Act must store their company documents in accordance with the new requirements. One of these requirements entails that the documents must be stored for a minimum of five years from the end of the financial year in which the documents were made.

The requirement to store documents for a minimum of five years also applies to the companies that are regulated by the Business Enterprises Act. However, sole proprietorships are excluded from these new requirements.

What documents must be stored?

The term “company documents” applies to the documents and appendices that companies are obliged to produce in accordance with the Companies Act. This is a broad definition which includes founding documents, articles of association, rules of procedure, minutes of general meetings, ownership documentation, shareholders’ ledger, and documentation of payment of share capital et cetera.

The requirement to store the documents applies not only to the documents that the company produces itself but also to those provided by external advisors, such as accountants and lawyers. Furthermore, the demand also applies to appendices produced voluntarily such as documents of an economic or accounting nature.

Companies covered by the Business Enterprises Act must, to a large extent, store the same type of documents.

How must the documents be stored?

The documents must be stored in such a manner that they, without difficulty, can be made available to public authorities. Companies may store the documents in both a physical and electronic manner, however it is not a requirement that the original document are stored. If the company stores the documents physically, they must be stored in Denmark.

It is important to keep in mind that the rules also apply to a company that ceases to exist, for example in the case of liquidation or resolution by declaration. In these cases, it is thus still necessary to store the documents for a number of years following the close down.

Risk of fines and forced dissolution

In case of lacking or inefficient storage of company documents, the company’s management can be punished with a fine and, in the worst-case scenario, the Danish Business Authority may choose to forcibly dissolve companies that do not follow the rules.

IUNO’s opinion

IUNO recommends that the management in all danish companies consider how they will ensure compliance with the new requirements.

It is especially important that the management ensures that the company documents are stored in a safe and sound manner. If the documents are stored electronically, IUNO recommends that backups are continually made, also for documents stored in the cloud. For documents stored physically, IUNO recommends that measures are taken to ensure that the documents are safe from fire hazards, theft and so on.

[Act amending the Danish Financial Statements Act, the Companies Act, the Act on Certain Business Enterprises, the Auditors Act and various other acts as of 19 May 2020]

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