Disqualification

Disqualification means that a person for a period is prohibited from participating in the management of companies in which officers and directors do not have personal or unlimited liability for the company’s obligations, such as public and private limited companies.

Persons who have been members of the management in a company that has become bankrupt may be disqualified. 

As a rule, the disqualification order will be made for a period of three years. The Bankruptcy restriction order can be extended by up to five years if the magnitude of the business misconduct is found to be particularly grossly irresponsible.

If a person breaches a disqualification order, the bankruptcy court may, depending on the circumstances, make a new disqualification order against the disqualified person. In this connection, the disqualification may be extended to a prohibition against participation in any form of commercial activities, including the person’s own sole proprietorship.

Breach of the disqualification order may also mean that the person concerned will be personally liable for the company’s obligations if it becomes insolvent.

Moreover, breach of the disqualification order may be punishable by a fine or imprisonment for up to six months in accordance with Section 131 of the Danish Criminal Code.

The liquidator initiates disqualification proceedings.

In all bankrupt estates, liquidators assess whether there is a basis for commencing disqualification proceedings.

In restructuring cases, the restructuring administrator and the expert nominee must describe any matters in the restructuring proposal that may justify disqualification proceedings.

The person against whom a disqualification order is made is registered in the Danish Business Authority's (in Danish: Erhvervsstyrelsen’s) disqualification register. A person who is subject to a disqualification order may not participate in the management of a business enterprise without having personal and unlimited liability for the obligations of the business, cf. Section 159 of the Danish Bankruptcy Act.

The information in the disqualification register is not publicly available.

The bankruptcy court may disclose information from the register to a liquidator or restructuring administrator if the bankruptcy court finds it necessary for the liquidator’s or the restructuring administrator’s task performance.