Denmark: Speakers corner

Have you listened to your client lately?

"Customer focus" is not a new invention, but during the present crisis more businesses have become even more aware that the customer relationship is in fact (still) the key to a successful business model. That applies to the success of any business.

Kromann Reumert's business is to fulfil our clients' needs by finding viable solutions that create value for our clients' businesses. Just like in any other type of customer based enterprise, such cooperation requires good relations between us and the individual client, and therefore "chemistry" and spirited teamwork among the people involved are central ingredients to success.

Our client interviews show this clearly, and we are therefore in the process of analysing all points of contact with our clients large and small. The paramount thing is that, taken as a whole, the contact points give a true and fair view of what our firm stands for. It takes a long time to make up for negative experiences, and it is important to work both at the strategic and more basic levels to give our clients and potential clients the best experience.

It is often our employees who have the best ideas, and it is crucial that their accumulated knowledge obtained during the course of their relationship with a client is always collected and converted into practical solutions.

Market news

New corporate governance recommendations

The Committee on Corporate Governance published its new recommendations for corporate governance on 8 April 2010. The recommendations are made in the light of the implementation of the Danish Companies Act, amended rules in the Danish Financial Statements Act and the Danish Act on Registered and State-Authorised Public Accountants and recommendations from the EU Commission, including those regarding remuneration of managers of listed companies.

The first recommendations on corporate governance in Denmark were issued in 2001 and were updated in 2005 and 2008.

The recommendations are primarily targeted at Danish companies whose shares are admitted to trading on a regulated market in Denmark, namely NASDAQ OMX Copenhagen A/S and Dansk AMP.

The purpose of the new recommendations on corporate governance is to bring the recommendations in line with developments in Danish and EU corporate legislation, OECD's Principles of Corporate Governance and recognised "best practice". Further, the Committee on Corporate Governance has sought to clarify the revised recommendations in order that they may become a useful and practical tool for companies and in order that it will become easier for others to evaluate whether a company complies with a given recommendation.

The new recommendations on corporate governance contain certain new requirements, including requirements which require that the listed companies must adopt new policies if they want to comply with the new recommendations. New demands have also been placed primarily on the work of the board of directors.

More information can be obtained from the vice-chairman of the committee and Kromann Reumert partner Marianne Philip

See the recommendations on the committee's website .

Legal news

The internet and its importance for the extension of national jurisdiction

Through the Internet information and dialogue can flow freely and across borders. In most circumstances this is a great advantage to citizens and authorities, but the Internet also increases the effective range of illegal acts. The trend of the latest legal practice is to extend the country of destination principle.

In the UK, a person can be sued for placing racist material on a website located abroad. This was confirmed by a judgment delivered by the English Court of Appeal in January 2010. The two defendants were found guilty of inciting racial hatred and publishing racist material contrary to English law on their website.

A central defence was that there was no English jurisdiction as the defendants used a California-based server for uploading the unlawful material. However, this defence was rejected as all Internet users, including those in the UK, could freely read the material. In addition, a substantial part of the preparation for the illegal activity took place in the UK, and the defendants controlled their website from the UK. It was also clear that the material was specifically aimed at UK residents as the site contained a dedicated UK section selling books and providing information about postage. The decisive legal principle was a so-called "substantial measure" test where the judge looked at the connection with the country of destination, the UK in this case.

The legal basis in Denmark

In response to the unclear legal position regarding jurisdiction, Denmark amended section 9a of the Danish Penal Code in July 2008. As a result, utterances that are unlawful in Denmark but made available to everybody from a computer abroad are considered to have been made in Denmark if the contents have a special relation to Denmark, for example if the language is Danish or if the material is targeted at a specific section of the Danish population.

Before the amendment, a country of destination principle applied to criminal offences committed through the Internet. That meant that a criminal act was considered to have been committed where the effect occurred or where the effect was intended to occur. The result was that the effect could be considered to occur in all countries where the material had been made available. The amendment to the act has eliminated this ambiguity about the extension of the country of destination principle.

The requirement that the material must have a special relation to Denmark is to avoid imposing on citizens who communicate on the Internet, a need to check the lawfulness of their utterances in all countries where the utterances may be available. This has been deemed to be inappropriate as it could result in people ceasing to speak their mind on the Internet for fear of being prosecuted in a foreign country.

The Internet blurs the borders

The Australian Internet provider iiNet was found not guilty copyright infringement by failing to stop its users from illegally sharing files. If Internet providers were held liable for their customers' actions, it would mean that almost anybody could sue them of anything. iiNet had been sued by the Australian Federation Against Theft (AFACT) on the basis that iiNet was liable for their users' illegal file copying and that iiNet should disconnect Internet users suspected of copyright infringements, or alternatively, send them letters threatening to disconnect them. AFACT thought that by refusing to do this, iiNet was an accessory to the copyright infringement. The case was decided by the Australian Federal Court in February 2010.

The judgement is of great importance to all Internet providers as much Internet traffic consists of infringing or insulting material. However, AFACT has appealed the case for the purpose of imposing on Internet providers a global liability for copyright infringement. Whether Internet providers should be held liable for copyright infringement is a current issue, and there are rumours that an Anti-Counterfeiting Trade Agreement is being negotiated between the USA, the EU and a couple of other countries. Apparently, this agreement would put Internet providers under an obligation to provide information about infringers, terminate suspected infringers' Internet access or perhaps be liable themselves for unlawful material - all without a prior court decision.

Another measure is in the pipeline in Italy. Through legislation, the government wishes to hold YouTube and other similar websites liable for unlawful material uploaded by users. This is not in line with the EU directive on electronic commerce (2000/31/EC). Under the directive, Internet providers cannot incur liability when their services consist solely of storing and/or disseminating users' material and when they are not involved in the material which is uploaded. According to the directive, member states have the option of imposing on the providers a standard of diligence requirement in connection with unlawful acts and, if unlawfulness is ascertained, an obligation to remove information or prevent access to it. However, a general monitoring obligation may not be imposed on the Internet providers. How Italy will bring its legislation in compliance with the directive remains to be seen.

Despite the not guilty verdict obtained by iiNet in Australia, it appears that the overall legislative trend is that Internet providers should be held liable for the acts of their users and should have a duty to monitor uploaded material. The consequence of such measures will be that a provider may be sued for material uploaded from anywhere in the world, and this will blur the jurisdiction issue in connection with unlawful material on the Internet.

Physical location no longer of importance to jurisdiction?

The State of Virginia has a new bill which was enacted by the State Senate on 16 February 2010. The act imposes a duty on Internet businesses to charge sales tax irrespective of their physical location. Known as "Lex Amazon" such legislation has already been passed by three states (New York, North Carolina and Rhode Island) and is under way in a number of other states.

The background to the act - and its name - is that Amazon.com does not charge sales tax when an item is sold to a customer in Virginia. According to prior law in Virginia, an enterprise must charge Virginia sales tax when it has a physical link to the state. Amazon.com has a data centre in Virginia, but because its headquarters are in Seattle it is doubtful that there is a sufficient physical link to Virginia.

Amaxon.com's not charging sales tax in Virginia resulted in a distortion of competition given that booksellers in the State are required to charge sales tax. Customers in Virginia could always get their goods at least 5% cheaper through Amazon.com. There is a statutory requirement that citizens themselves report the tax amounts payable, but in reality, Virginia's tax authorities have no way to check this.

In practice, an item ordered on Amazon.com is supplied by one of Amazon.com's local partners. A percentage of the sale price accrues to the cooperation partner, and such percentage would not have been subject to sales tax. There is wide consensus that these instances are violations of the applicable sales tax law, and this has led to the passage of the new law.

Lex Amazon is another example of the declining importance of the physical location of Internet based businesses. National borders will lose their significance, and the formerly rigid division of jurisdictions will become blurred.
Global trends seem to be towards new regimes for solving jurisdiction issues. This is particularly true in cases of criminal utterances on the Internet affecting individuals residing in other countries. In these cases, the trend is that the registered address of the aggrieved parties will be decisive for determining jurisdiction rather than the location where the infringing material originates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.