Public limited company (A/S): a guide to everything you need to know

Public limited company (A/S): everything you need to know

A public limited company (aktieselskab, A/S) is one of the most established company forms in Denmark, particularly for larger businesses that want to raise capital through shares and be able to attract more investors. The A/S is an independent legal entity that protects its owners against personal liability and allows them to expand the business by issuing shares. In this article, we cover everything you need to know about public limited companies, including formation, requirements, tax rules, and advantages and disadvantages.

What is a public limited company (A/S)?

A public limited company is a company form in which the business is an independent legal entity, and the owners (shareholders) are liable for the company's debts only up to the capital they have contributed. An A/S can issue shares to the public or to private investors, making it possible to raise capital for the company's operations and growth. A public limited company therefore has greater scope to attract investors than other company forms such as private limited companies (ApS).

Who is liable in a public limited company?

In a public limited company, the shareholders are liable only for the capital they have invested in the company, which means they do not risk losing their personal assets if the company runs into debt or difficulties. This limited liability protects shareholders against financial responsibility beyond their contributed capital.

How do you set up a public limited company?

Setting up a public limited company requires more effort and capital than other company forms such as an ApS. Here are the basic steps:

1. Share capital:
   A public limited company requires share capital of at least DKK 400,000, which must be paid in before the company can be registered. The capital can be cash or assets such as equipment or property, but assets must be valued by an auditor.
2. Memorandum and articles of association:
   A public limited company must have a memorandum of association describing the company's purpose, as well as articles of association setting out the rules for the company's operation and management.
3. Registration with the Danish Business Authority:
   The company must be registered on Virk.dk to be assigned a CVR number (company registration number). You must also state the company's name, address, purpose and other relevant information.
4. Board of directors and executive board:
   A public limited company must have a board of directors, and in some cases the company may also have an executive board. The board of directors is responsible for overall management, while the executive board handles day-to-day operations.
5. Auditor:
   A public limited company will normally need an auditor, who prepares the financial statements and audits the accounts where required.

Requirements for a public limited company

• Share capital: At least DKK 400,000 (the capital requirement is a key characteristic of public limited companies).
• Ownership structure: The company can have one or more shareholders, and the shares can be traded freely (unless specific restrictions apply).
• Management: A public limited company must have a board of directors. The board is responsible for the company's strategic decisions and overall management.
• Auditor: Public limited companies must have an auditor who reviews and audits the company's accounts, particularly if the company is of a larger size.

Tax rules for public limited companies

1. Corporation tax:
   A public limited company is subject to corporation tax of 22% on its profits. This means that the company itself pays tax on its profits, and the owners' personal tax position is not affected until dividends are distributed.
2. Dividend taxation:
   When shareholders take dividends from the company, the dividends are taxed as share income. Dividends up to DKK 56,500 are taxed at 27%, and dividends above this amount at 42% (for 2025).
3. Salary:
   Shareholders who work actively in the company can receive a salary, which is taxed as personal income. The salary is subject to labour market contribution and income tax, depending on its size.

VAT and duties

• VAT registration:
  If the company has an annual turnover of more than DKK 50,000, it must register for VAT and charge VAT on its goods and services.
• VAT reporting:
  VAT must be reported quarterly or half-yearly, depending on the company's turnover.
• Duties:
  Depending on the industry, additional duties may apply, such as environmental duties or other special duties related to the company's activities.

Advantages of a public limited company

• Limited liability:
  Shareholders are liable for the company's debts only up to their contributed capital, which protects their private finances.
• Raising capital:
  A public limited company can issue shares, which offers significant opportunities to raise capital and attract investors.
• Professional image:
  The A/S has a more established and professional image, which can be an advantage when attracting investors or entering into partnerships with other businesses.
• Tax advantages:
  The option to retain profits in the company and pay the lower corporation tax of 22%, which can support growth.
• Option to list:
  If the company grows large, it can be listed on the stock exchange, opening the door to raising capital by issuing shares to the public.

Disadvantages of a public limited company

• High share capital:
  The requirement for share capital of at least DKK 400,000 can be a significant barrier for many entrepreneurs who do not have access to the necessary capital.
• Higher costs:
  A public limited company has higher running costs in the form of an auditor, a board and accounts, which can be more expensive to administer than for other company forms such as an ApS.
• Complex management:
  The A/S requires a board of directors and possibly an executive board, which can lead to a more complex organisation than, for example, an ApS or a sole proprietorship.

Is a public limited company the right choice for you?

A public limited company is ideal for larger businesses that need to attract capital from investors and may wish to list at a later stage. It is also a good solution for those with significant financial ambitions who want a corporate structure that allows for growth and expansion. However, you should be aware of the high capital requirement and the administrative burden that comes with setting up and running a public limited company.

Interested in starting a public limited company or learning more about the specific requirements and opportunities? Contact a professional adviser or auditor who can help you make the right decision for your business.