Questions

Choice of organizational form

The choice of organizational form is a complex exercise that involves balancing a number of factors regarding the port's commercial activities, taxation, financing and organization, including, among other things:

  • Upon conversion to an A/S port, an autonomous port's loans in KommuneKredit must be repaid and no new loans can be raised in KommuneKredit.
    • It can be essential for a port to have access to KommuneKredit to finance new port facilities.
  • Unlike a self-governing port, a limited company port is only conditionally tax-exempt. The tax exemption is subject to the condition that no more can be distributed than what corresponds to a normal return on the paid-in capital.
    • In other words, both the Port Act and the Corporation Tax Act limit how much the port can distribute to the municipality - if it is to maintain its tax exemption. 
  • Conversion to an A/S port triggers a registration fee of 0.6% of the property value. A conversion of port areas with a value of e.g. DKK 100 million thus costs DKK 600,000 in registration fees.  
  • In an autonomous port, there is a connection with the municipality's finances in that the municipal borrowing limit is extended corresponding to the port's own financing of any expansions.
    • If a port expands its port for e.g. DKK 250 million, divided into loans of e.g. DKK 150 million and self-financing of e.g. DKK 100 million, the municipal loan limit will be expanded by DKK 100 million in the same year.  
  • Unless a port needs to be able to carry out port-related operator activities, the port and the municipality should consider allowing the port to remain organized as a municipal autonomous port. As a municipal autonomous port, the port has:
    • 1) a range of business opportunities,
    • 2) unconditional tax exemption,
    • 3) access to loans in KommuneKredit and
    • 4) the possibility to expand the municipal borrowing limit through investments. A municipality has unlimited liability for the debt of an autonomous port, while it is not liable for the debt of an A/S port. In reality, however, a municipality is unlikely to let a private limited company port go bankrupt, so in practice the municipality can also be liable here.
  • A municipality has unlimited liability for the debts of a self-governing port, while it is not liable for the debts of a private limited company port. In reality, however, a municipality is unlikely to let a private limited company port go bankrupt, so in practice the municipality can also be liable here.

An overview comparing the self-government port and the limited company port on a large number of the points mentioned and more is attached.