What are the main features of the constitution of each type of corporate vehicle used to invest in real estate?
A partnership comprises partners who are either individuals or companies. Each partner has unlimited joint and several liability for the activities of the partnership. A partnership is not governed by the Danish Companies Act. However, certain provisions of the Act on Certain Commercial Undertakings, law no. 249 of 2 January 2021 (Lov om erhvervsdrivende virksomheder) apply, for instance regarding the partnership’s name. The partnership is tax transparent.
Partnerships where at least one partner is not a limited company must be registered with the Danish Business Authority in accordance with the registration rules regarding sole trader businesses.
However if all partners are limited companies the partnership must be registered with the Danish Business Authority in accordance with the rules applicable to public limited companies, where the articles of association and the partnership's annual report will be available to the public.
In a public limited company, the capital contributed by the shareholders is divided into shares. The shares of a public limited company may be offered to the public through a listing on a stock exchange.
The shareholders' liability for the activities of the public limited company is limited to their respective capital contributions. A public limited company is governed by the Danish Companies Act.
In a private limited company, the capital contributed by the shareholders is divided into shares. The private limited company has traditionally been used for businesses with only a few shareholders who do not seek to raise capital from a wide circle of investors. A private limited company cannot have its shares listed on a stock exchange.
The shareholders' liability for the activities of the private limited company is limited to their respective capital contributions. A private limited company is governed by the Danish Companies Act.
In a limited partnership, the general partner is personally liable for the liabilities of the limited partnership. Consequently, the general partner is often a private limited company or a public limited company. The limited partners are only liable up to the extent of the capital they have contributed. A limited partnership is tax transparent.
A limited partnership is not governed by the Danish Companies Act. However, certain provisions of the Act on Certain Commercial Undertakings, law no. 659 of 1 July 2019 (Lov om erhvervsdrivende virksomheder) apply, for instance regarding the limited partnership’s name, power of procuration and the requirement for administrative and financial powers of the general partner.
Partnerships where the general partner is not a limited company must be registered with the Danish Business Authority in accordance with the registration rules regarding sole trader businesses.
However, a limited partnership must be registered with the Danish Business Authority, in accordance with the registration rules for public limited companies, if the general partner is a public limited company or a private limited company. The articles of association and the limited partnership's annual report will be available to the public.
A limited partnership company is a public limited company, in which the limited partners (shareholders) have contributed a certain amount of capital which is divided into shares. However, like a limited partnership a limited partnership company includes a general partner with unlimited liability. A limited partnership company is considered transparent for tax purposes.
A limited partnership company is governed by the Danish Companies Act with necessary adjustments.