Abolishing Entrepreneurial Company (IVS) in Denmark: How Substantiated Are the Reasons and What Are the Negative Effects on Entrepreneurship?

7 Pages Posted: 9 May 2019

See all articles by Alexandra Andhov

Alexandra Andhov

University of Copenhagen - Faculty of Law; University of Copenhagen - Centre for Private Governance (CEPRI)

Date Written: April 11, 2019

Abstract

Danish Parliament adopted a law (L190) that abolishes the formation of entrepreneurial companies (iværksætterselskab) IVS in Denmark. This decision has raised surprise and concern from business and academic communities, questioning the decision-making processes of the Danish government. The entrepreneurial company form was introduced in 2014 with the aim to strengthen the entrepreneurship in Denmark. Currently the Government claims that the aim has not been reached. Based on the analysis prepared by the Danish Business Authority (Erhvervsstyrelsen) from September 2018 there are reasons to dissolve or transform all the existing IVS companies within the next two years and abrogate the IVS form from the Danish Companies Act completely. In this short essay, I briefly introduce the IVS company form and reflect on the Analysis prepared by the Danish Business Authority. I provide some thoughts on the substance of this Analysis and its key weaknesses when justifying their main outcomes, for which the IVS form is to be repealed – that these companies have, to a greater extent than expected, led to an increased risk of fraud and tax evasions. I conclude the article with few reflections on the minimum capital requirement, importance of legislative review and building entrepreneurship in Denmark. These conclusions are however universal and applicable across diverse jurisdictions.

Keywords: entrepreneurship, start-up, regulation, capital requirement

Suggested Citation

Andhov, Alexandra, Abolishing Entrepreneurial Company (IVS) in Denmark: How Substantiated Are the Reasons and What Are the Negative Effects on Entrepreneurship? (April 11, 2019). Available at SSRN: https://ssrn.com/abstract=3370620 or http://dx.doi.org/10.2139/ssrn.3370620

Alexandra Andhov (Contact Author)

University of Copenhagen - Faculty of Law ( email )

Studiestraede 6
Studiestrade 6
Copenhagen, DK-1455
Denmark

University of Copenhagen - Centre for Private Governance (CEPRI) ( email )

Karen Blixens Vej 16
Copenhagen, 2300
Denmark

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