Section 2: Financial assistance from local authorities and their groupings

The contribution to the members' current account referred to in the first paragraph of article L. 1522-4 is allocated within the framework of an express agreement between the shareholder local authority or grouping, on the one hand, and the local semi-public company, on the other hand, which stipulates, on pain of nullity:

1° The nature, purpose and duration of the contribution;

2° The amount, the conditions for repayment, possibly remuneration or conversion into a capital increase of the said contribution.

The shareholder current account contribution may not be granted by the shareholder local authorities and their groupings for a period of more than two years, which may be renewable once. At the end of this period, the contribution is repaid or converted into a capital increase. No new advance may be granted by the same local authority or grouping before the previous one has been repaid or incorporated into the capital. The purpose of an advance may not be to repay another advance.

However, the conversion of the contribution into a capital increase may not have the effect of increasing the holding of the local authority or grouping in the company's share capital beyond the ceiling resulting from the provisions of article

L. 1522-2

.

The local authority or grouping may not grant the advance to the local semi-public company if the total advances already granted by the local authority or grouping to semi-public companies exceed, with this new advance, 5% of the actual revenue of the operating section of the budget of the local authority or grouping.

No advance may be granted by local authorities or their groupings if, as a result of losses recorded in the accounting documents, the equity capital of the semi-public company has fallen below half of the share capital.

The deliberative assemblies of the shareholder local authorities and their groupings decide on the granting, renewal or conversion into capital of a shareholder current account contribution on the basis of the following documents:

1° A report by a representative of the local authority or grouping on the board of directors or supervisory board of the local semi-public company;

2° A deliberation by the board of directors or supervisory board of the local semi-public company setting out the reasons for such a contribution and justifying its amount, duration and the conditions for its repayment, possible remuneration or conversion into a capital increase.

A decree in the Conseil d'Etat determines the terms and conditions for remunerating partners' current account contributions.