Medarbejderrepræsentation i danske aktieselskaber: Employee representation in Danish joint-stock companies

Frederik Asboe & Michael Carlsen

Student thesis: Master thesis


As a consequence of the financial crisis, an increasing number of Danish companies are declared bankrupt. These bankruptcies may cause significant losses for the company's creditors and shareholders, for which reason they might attempt to collect the debt from the given company and its management, including the employee-elected members of the board of directors respectively the supervisory board. This can lead to financial ruin for the employee representatives, who presumably cannot cover the given loss and as a result risk being declared bankrupt. This issue has, among others, led to the question, why the newly enacted Companies Act includes legal basis for employee representation and how the provisions could be optimized by minimizing the conflicts of interests. The first part of the thesis analyses the provisions in the new Danish Companies Act in terms of the employees' rights to representation in joint-stock companies and the duties as well as liabilities, which are enclosed in these rights. It is concluded that employees in joint-stock companies, by granting the legal requirements, have the right to fill at least one-third of the positions in the company's board of directors respectively the supervisory board. As a consequence of making use of this right, considerable and complex duties as well as liabilities arise for the representatives. The second part of the thesis investigates which conflicts of interests the Companies Act prompts and furthermore, the thesis aims towards solving those issues. It is concluded that the conflicts of interests can be reduced partly by means of external markets, but mostly by implementing internal incentive-creating mechanisms, which include liability-insurance for the board of directors, performance based pay, exclusion of union representatives to act as employee representatives and finally education of the employee representatives. The third and final part integrates the legal provisions with the economic instruments, which can solve the conflicts of interests, to suggest how the legislation could be optimized for the benefit of the companies and the employee representatives. It is determined that the continuation of the employees' rights to representation rest on an unfounded basis. However, as the rights are carried on, the provisions in the Companies Act should be modified by placing a legal liability-insurance, covering the representatives, on the companies. Furthermore, the company should be required to offer appropriate education to the management. Exclusion of union representatives among employee representatives might have unintended consequences and as a result, this cannot be recommended without further investigation. Finally, it is concluded that the protection against dismissals for the employee representatives should be sustained in the Companies Act.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2010
Number of pages160