Municipal companies; notification of municipal decisions

Municipalities may operate companies as their own business, independent municipal companies under public law or in the legal forms of private law. Certain decisions made by local authorities must be submitted to the legal supervisory authority in good time.

Municipalities may operate companies outside their general administration in the legal form of a municipal enterprise, an independent municipal company under public law or in the legal forms of private law. They may only set up, take over or significantly expand such companies if a public purpose requires the company, i.e. if the purpose of the company lies within their municipal remit. Outside of municipal services of general interest, the purpose of the company may not be fulfilled or be able to be fulfilled just as well and economically by another (private) party.

Own enterprises are municipal companies that are managed outside the general administration as special assets without their own legal personality. The works management appointed by the municipal council or district council manages the day-to-day business. In all other respects, the works committee, which is also appointed by the municipal council, district council or district assembly, makes decisions unless the municipal council, district council or district assembly reserves the right to make such decisions or refers them to itself in individual cases. A business plan with a financial plan is drawn up for the municipal enterprise in accordance with the Eigenbetriebsverordnung. The business plan consists of the profit plan and the asset plan. The necessary borrowing and commitment authorizations are set out in the local authority's budget bylaws.

The municipality can set up an independent municipal enterprise in the legal form of an institution under public law or convert existing public and private enterprises into municipal enterprises by way of universal succession. Individual or all tasks associated with a specific purpose can be transferred in whole or in part to the municipal enterprise. The authority to issue bylaws and ordinances and to enforce them can also be transferred. This must be regulated in a company statute to be adopted by the responsible body (municipal council, district or county council) of the municipality. The company is managed by an executive board and a board of directors. The company draws up a business plan, subdivided into a profit and asset plan, as well as a financial plan.

The establishment of or participation in companies under private law is only permitted if the purpose of the company lies within the remit of the local authority. In addition, the local authority must have appropriate influence on the supervisory board or a corresponding body and the liability of the local authority must be limited to a certain amount. In practice, municipalities therefore prefer the legal form of a GmbH. If the municipality holds the majority of the capital in the company, it must ensure that the company draws up a business plan (profit and asset plan) and a financial plan based on commercial accounting. The local authority must present its shareholdings of more than 5% of the share capital in companies under private law in an annual report to the responsible body (municipal council, district council, district assembly, association assembly). In particular, this participation report should contain information on the fulfillment of the public purpose, the shareholding structure, the composition of the company's bodies, the remuneration of the individual members of the managing body, the earnings situation and borrowing. Anyone can inspect the investment report.

In addition to the aforementioned types of company (owner-operated company, municipal company and private legal form), local authorities can manage facilities within their general administration as Regiebetriebe in whole or in part in accordance with the regulations on the economic management of owner-operated companies without having to create new administrative levels or new bodies. In this case, the responsibility for tasks remains with the local authority bodies.

The following decisions by the municipality on

• the establishment, takeover and significant expansion as well as changes to the legal form or tasks of municipal companies,
• the direct or indirect participation of the municipality in companies,
• the complete or partial sale of municipal companies or participations,
• the dissolution of municipal companies

must be submitted to the legal supervisory authority in good time - but at least six weeks before their execution. However, there is no duty of notification in the case of participation in a company and the sale of municipal companies or participations if the decision affects less than 5% of the shares in the company.

• Panel decision
• Company statutes
• Information on the existence of the conditions concerning the admissibility of the establishment, acquisition or participation in the company

The municipalities must notify the above-mentioned decisions at least six weeks before they are implemented.