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Global Employment briefing: Denmark, October 2018

  • Europe
  • Employment law

03-10-2018

Significant changes proposed to the Danish Stock Options Act

The Danish Ministry of Employment has suggested changes to the rules in the Danish Stock Op-tions Act, thereby introducing greater flexibility and freedom of contract in connection with im-plementing stock option programs for employees in Denmark.

Removal of current rules about 'good leaver / bad leaver'

Today, the 'good leaver / bad leaver' regulation in the Danish Stock Options Act means that an employee who terminates his own employment relationship loses all his stock options granted. On the other hand, an employee who has been served notice of termination by the employer has the right to retain all of his stock options granted and is entitled to be granted a proportion-ate part of the stock options calculated on the basis of the employment period during the ac-crual period in which the employee leaves the company.

The Danish government’s proposal sets out to remove the limitations on what can be agreed in stock option programs in connection with the employee's termination of employment, thus in-troducing a greater degree of flexibility and freedom of agreement. With the proposed changes to the Stock Option Act, the "good leaver / bad leaver" regulation is removed from the current Act.

As a consequence, the changes mean that it may be agreed that non-exercised options will lapse upon termination, irrespective of the reason for termination, and whether termination is caused by employer or employee. It will also be possible to agree on an accelerated exercise period after resignation in respect of vested options.

Repurchase of shares acquired through stock option scheme

The changes also contain a proposal that shares acquired as a result of a stock option program may be repurchased by the employer at market price in connection with termination.

When will the changes take effect

The proposal is expected to be introduced to the Danish Parliament in October 2018 with a view to its entry into force on 1 January 2019.

For further information, please contact

Anne Marie Abrahamson
Phone: +45 35252535
ama@lundgrens.dk

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