Introduction of share classes in a company with only one owner of capital did not result in relinquishment taxation

Date 1 feb. 2011


The National Tax Board found that an amendment of the articles of association which divided company C ApS’ private company capital into A- and B-shares, giving the A-shares right of priority to dividend on shares, could not be equated with relinquishment.


The case in brief

Person A, who owned the company B ApS, which again owned all the shares in C ApS, wanted to let C ApS undergo a generational handover with an independent third-party, X. The intended generational handover should take place by splitting the shares in C ApS into A- and B-share classes. After the generational handover, B ApS’ shares in C ApS would constitute A-shares, and X or X’s company should thus make a new acquisition of B-shares which constituted 10% of the aggregate private company capital.


The legal basis

Amendments to the Articles of Association which concern the company's shares will be considered a relinquishment if the shares may be said to have changed identity. However,  this only applies when the amendments to the Articles of Association result in a shift of property between the shareholders. This is mainly the case when there is a change in distribution of dividend, for example when the private company capital is converted into share classes and some share classes enjoy economic advantages at the expense of other share classes. In the event that there is only one shareholder at the time of the amendment to the Articles of Association and at the time when the share classes are created, a shift of property may not take place.


The National Tax Board’s decision 

The National Tax Board noted that B ApS was the only shareholder in C ApS at the time when the amendment to the Articles of Association was carried out and when the shares were divided into share classes. The new shareholder, X, would not become a shareholder until after the shares had been divided into share classes. There has to be a shift of property before an amendment to the Articles of Association may be regarded a relinquishment, which again implies that the company has to have at least two shareholders. Because X would not achieve status of shareholder before after the amendment to the Articles of Association had been carried out, there was only one shareholder at the time when the share classes were introduced. Therefore, the condition for a shift of property was not present.


The consequences of the judgment

With its decision, The National Tax Board correctly establishes that an amendment to the Articles of Association which creates a share class with preferential position when it comes to dividend on shares can not be equated with relinquishment if a shift of property does not take place between the shareholders at the same time. This is not the case if there is only one shareholder at the time of the amendment to the Articles of Association.



If you have any questions or require additional information on the above, please contact partner Jakob Bundgaard ( or junior associate Kim David Lexner (


The above does not constitute legal counselling, and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.