A Danish limited partnership (K/S) is a flexible company form often used for real-estate projects, investment projects and other collaborations where some participants want limited liability while others take on more extensive risk. The structure combines elements of both capital and personal companies and can offer tax and commercial advantages — but requires careful planning.
Because the liability of the general partner is so far-reaching, a well-thought-out partnership agreement and clear arrangements on roles, finances and decision-making are essential.
Participants, liability and capital
A K/S has two types of participants:
The general partner (komplementar)
- is in principle personally, unlimitedly and jointly liable for the partnership's obligations,
- is in practice often an ApS or A/S to limit the actual personal risk.
The limited partners (kommanditister)
- are liable up to a limited amount — typically what they have committed to contribute,
- participate as investors with rights and obligations set out in the contract.
There is no fixed statutory minimum capital requirement as for ApS and A/S, but:
- creditors and banks pay close attention to the capital base,
- the limited partners' contributions and liability are set out in the partnership agreement.
We help you to:
- design a capital structure that matches the project's needs and risk profile,
- arrange the relationship between general and limited partners,
- formulate clear rules on contributions, liability and economic distribution.
Formalities for incorporating a K/S
A K/S is a registered personal company with special liability rules. In practice, the following is central:
Limited partnership agreement (or articles)
is the central document, regulating all material matters, including:
- the participants (general and limited partners),
- capital contributions and liability,
- profit allocation,
- decision-making processes and voting rights,
- entry and exit, transfer of partnership interests,
- handling of breach, disputes and dissolution.
Registration with the Danish Business Authority
- the K/S is registered as a commercial entity,
- information about the general partner, industry, name, signing rule etc. is registered.
We draft and tailor the partnership agreement so it both:
- complies with company law requirements, and
- is workable in practice for everyone involved in the project.
Management and decision-making
A K/S is not legally required to have a board in the same way as an A/S, but in practice a formal management structure is almost always established. Typically:
- the general partner handles formal management and signs for the partnership,
- a board can be set up in the general-partner company (ApS/A/S), which then indirectly leads the K/S,
- the limited partners can have influence through general meetings, partner meetings or special committees.
It is important to set out clearly:
- which dispositions the general partner can make alone,
- which decisions require approval from a majority or all limited partners,
- how information and reporting to the limited partners is to be handled.
We advise on:
- a balanced decision-making structure that both protects investors and gives management freedom to act,
- drafting the signing rule and management powers,
- setting up reporting routines and an annual cycle (budget, accounts, distributions etc.).
Tax and economics
A K/S is in principle tax transparent, meaning the result is taxed at the level of the participants and not in the K/S itself. This can be an advantage, but requires thorough planning. We typically involve an auditor in:
- choice of structure for general and limited partners,
- profit allocation,
- setting up the accounts and bookkeeping so documentation is sufficient.
Overall, professional assistance with incorporation of a K/S gives the project a solid foundation, where all parties know what they are entering into — legally, financially and practically.