Power of attorney for a business sale

When do you need a power of attorney?

A power of attorney (in Danish «fuldmagt») is needed when someone other than you must be able to bind you in the deal: negotiate on your behalf, sign the purchase agreement, receive documents or instruct the bank. Typical cases are an owner who lives abroad or is ill, a couple where only one attends, or a lawyer who signs the transfer documents at completion.

You do not need one when the person signing for a company can already bind it under the signing rule (tegningsregel) recorded in the Danish Central Business Register (CVR), for example a managing director with sole authority. Nor does a power of attorney replace a shareholders’ agreement or a general meeting resolution where the articles require one.

What the template contains

• Principal and attorney: who grants the authority and who receives it, with name, CVR number or date of birth and address.
• The transaction: which business and which deal the authority covers, so it cannot be used for anything else.
• Scope: the choice between a general power of attorney for everything relating to the deal and a specific one for named acts.
• Limits: for example a minimum price, a cap on warranties, a ban on receiving payment or a requirement for your approval before signing.
• Substitution: whether the attorney may pass the task to someone else.
• Validity and revocation: when the authority expires and how you withdraw it.
• Attorney’s duties and fee: that the attorney must act in your interest and keep you informed.
• Governing law and signature: Danish law, your signature and two attesting witnesses.

Points to watch

Under the agency rules of the Danish Contracts Act (aftaleloven), you are bound by what the attorney agrees within the scope of the authority, as if you had signed yourself. What matters is the wording of the power of attorney that the other party sees. Private instructions given orally or by email generally do not bind a counterparty acting in good faith.

• Keep it narrow: a specific authority to sign one purchase agreement is safer than a general authority for «everything concerning the sale».
• Write the limits in: minimum price, maximum warranty liability and payment to your own account belong in the document itself, not in a side note.
• Set an end date: an authority without expiry can be used long after the deal has closed or been abandoned.
• Revocation: you can generally revoke a power of attorney, but it may still bind you towards a counterparty in good faith until that party has been told. Ask for the original back and notify the counterparty in writing at once.
• Companies: when an ApS or A/S grants authority, it must be signed by those who can bind the company under its signing rule. Check the CVR register before sending it.
• Digital filings: filings with the Danish Business Authority (Erhvervsstyrelsen) and land registration are digital and may require a separate authorisation in that system or a signature with MitID Erhverv. Ask the recipient which form they accept.
• Use abroad: notarisation and an apostille may be required.

Online and physical businesses

For an online shop, SaaS product or app, the attorney often needs to do more than sign: transfer domains at the registrar, move accounts with the payment provider, hosting and app stores, and grant access to the code base. Name the specific acts, and consider whether the attorney should receive passwords or whether you hand them over yourself.

For a shop, restaurant or manufacturing business, the authority typically covers signing the transfer of equipment and stock, dealing with the landlord and informing staff. If a new commercial lease is to be signed, say so expressly.

How to use the template on Sitavo

The power of attorney is available to you if you have an active or pending listing or an ongoing deal on Sitavo. Otherwise you can read the first sections on this page. You fill it in with the editor in your account, choose a general or specific authority, edit the wording directly and download it in Word or PDF for signing. The document text itself is in Danish, as the deal is governed by Danish law.

It is used together with the agreements the attorney will sign: the letter of intent and the purchase agreement for an asset deal or a share deal. The seller’s guide chapter on the purchase agreement explains what is signed when, and the deal process shows the steps on Sitavo. If you would rather hand the whole sale to a professional, you can find an adviser or broker.