Recommendations on Professional Foundations Management

The Danish Act on Commercial Foundations requires that a committee for professional foundations management is established, and that such committee sets out a number of recommendations for professional foundations management.

These recommendations describe good business practice in relation to the foundation’s objects of activity and awarding and state that the board of trustees’ only duty is to attend to the interests of the foundation. The recommendations also prescribe that the management of the foundations must be competent and professionally conducted in accordance with the founder’s will, the trust deed and the current statutes.


The recommendations should be regarded as a supplement to any other legislation on commercial foundations; however, they do not provide a thorough prescription for professional management of commercial foundations, as the trustees, the challenges and the affairs are too diversified.


All reporting on the foundation’s adherence to the recommendations must follow “the principle of observing or explaining”.


If a recommendation is not adhered to, the board of trustees must explain (i) why it has decided to arrange matters differently, and (ii) how it has decided to arrange matters instead.


Any non-adherence to a recommendation is not a breach of rules but merely expresses an actual choice of arranging matters differently. This means that there is no immediate sanction for not adhering to a specific recommendation, but if there is no (good) reason for derogating from a recommendation, the foundations supervisory authority (i.e. the Danish Business Authority) may be expected to ask questions to the board of trustees and perhaps order the trustees to adhere to the recommendation, if the conditions for any such order are otherwise fulfilled.


All commercial foundations must declare, whether they adhere to the recommendations, either in the annual report, viz. in the management report, in the notes to the annual report, or on the foundation’s website referred to specifically in the management report or the notes.


The information must provide a clear presentation, preferably by the use of a schematic format for the purpose of examining the recommendations.