Equity Crowdfunding and Halved Capital Requirement for ApS (private LCC)
- 2 minute read
- Legal & Corporate Law
From 1 January 2025, private limited liability companies in Denmark (ApS or Anpartsselskaber) will experience a significant improvement in their ability to obtain financing. The Danish Parliament has just passed Bill 71 amending the Companies Act, which is part of the entrepreneurship package concluded on 21 June 2024. This amendment opens up two important initiatives: the possibility of equity crowdfunding and a halving of the capital requirement for ApSs. Per 27 February 2025 the capital requirements to ApS of 20,000 has officially entered into force.
New possibility for Equity Crowdfunding
What is Equity Crowdfunding?
Equity crowdfunding is an innovative form of financing where a company raises capital through an offering of shares to the public. This can be done via an approved crowdfunding platform or by offering directly to qualified investors.
How does Equity Crowdfunding work?
The new rules will allow private limited liability companies to reach a much broader group of potential investors. This means that small and newly founded companies can attract venture capital by offering shares to the public. However, the shares in a private limited liability company still cannot be admitted to trading on a regulated market or a multilateral trading facility.
Benefits for entrepreneurs
Equity crowdfunding offers entrepreneurs a unique opportunity to raise capital from a broader group of investors, including both private and institutional investors. This can be crucial when financing the start-up phase and development of a business.
Halving of the capital requirement for limited liability companies (ApS)
New capital requirement
The new law results in a halving of the capital requirement for private limited liability companies, which is changed from DKK 40,000 to DKK 20,000. This reduces the entry barriers for entrepreneurs who want to establish or run a business via a limited liability company.
Practical Consequences
When the change in the capital requirement comes into effect, it will be possible to establish new private limited liability companies with a share capital of just DKK 20,000. Existing private limited companies can also make capital reductions to the new minimum limit, as long as they meet the other requirements of the Companies Act, including adequate capital resources.
Future steps and entering into force
The law will enter into force on 1 January 2025, but the provisions on reducing the capital requirement has been pending changes to the Danish Business Authority’s IT systems, as this is where the company is registered. The Danish Business Authority has on the 27 February 2025 stated that the new capital requirement to ApS of 20,000 DKK has entered into force.
These changes will not only make it easier for entrepreneurs to raise capital, but also reflect the general level in the rest of Europe. The aim is to improve entrepreneurs’ opportunities for raising capital in the start-up phase and support economic development in Denmark.
