French General Code of Local Authorities
In forceEach shareholding local authority or group of local authorities is entitled to at least one representative on the Board of Directors or Supervisory Board, appointed from among its members by the relevant deliberative assembly.
In a proportion no greater than that of the capital held by all the shareholding local authorities or their groupings in relation to the company's capital, the Articles of Association set the number of seats they have on the Board of Directors or Supervisory Board, this number being rounded up if necessary. Seats are allocated in proportion to the capital held by each local authority or grouping. In addition, shareholder public health establishments, public social or medico-social establishments or cooperative groupings are entitled to at least one representative on the board of directors or supervisory board, appointed from among its members by the board of directors of the establishment or grouping concerned.
If the number of members of a board of directors or a supervisory board as provided for in articles L. 225-17 and L. 225-69 of the Commercial Code is insufficient to ensure, due to their number, the direct representation of local authorities or their groupings with a reduced stake in the capital, they shall be convened in a special meeting, with at least one seat reserved for them.The special meeting appoints the joint representative(s) who will sit on the board of directors or supervisory board from among the elected representatives of these local authorities or groupings.
Persons who represent a local authority or grouping on the board of directors or supervisory board of a semi-public company must comply, at the time of their appointment, with the age limit stipulated in the first paragraph of articles L. 225-19 and L. 225-70 of the Commercial Code.
When the same persons assume the duties of Chairman of the Board of Directors, they must also comply, at the time of their appointment, with the age limit provided for in Article L. 225-48 of the Commercial Code.
These persons may not be declared to have resigned automatically if, subsequent to their appointment, they exceed the statutory or legal age limit.
These persons are not taken into account when calculating the number of directors or supervisory board members who may remain in office beyond the age limit, either by virtue of the company's articles of association or, in the absence of express provisions in the articles of association, by virtue of the aforementioned articles of the Commercial Code.
Notwithstanding article L. 225-20 of the Commercial Code, the civil liability resulting from the exercise of the mandate of the representatives is incumbent on the local authority or grouping for which they are agents. Where these representatives have been appointed by the special meeting, this liability shall fall jointly and severally on the local authorities or groupings that are members of this meeting.
Local elected representatives acting as agents of the local authorities or their groupings on the board of directors or supervisory board of local semi-public companies and holding, to the exclusion of any other position in the company, the positions of member, chairman of the board of directors or supervisory board and chairman performing the duties of chief executive officer of a local semi-public company are not considered to be municipal, departmental or regional service contractors within the meaning of articles L. 207, L. 231 and L. 343 of the Electoral Code.
These representatives may receive remuneration or special benefits provided that they are authorised to do so by an express resolution of the assembly that appointed them; this resolution sets the maximum amount of remuneration or benefits that may be received as well as the nature of the duties that justify them.
Notwithstanding article L. 1111-6 of the present code, local elected representatives acting as representatives of local authorities or their groupings on the board of directors or supervisory board of local semi-public companies and exercising the functions of member or chairman of the board of directors, chairman and managing director or member or chairman of the supervisory board, are not considered, for this reason alone, to be interested in the business, within the meaning of article L. 2131-11 of this Code, article 432-12 of the French Penal Code or I of article 2 of Law no. 2013-907 of 11 October 2013 on transparency in public life, when the local authority or grouping is deliberating on its relationship with the local semi-public company. This status alone entails the same consequences when the local elected representative takes part in the deliberations of the company's board of directors or supervisory board relating to its relations with the local authority or grouping that he represents. However, when the local semi-public company is a candidate for the award of a public procurement contract, they may not take part in the tendering committees, or in the committees mentioned in article L. 1411-5, or in the decision awarding the contract. Similarly, they may not take part in the deliberations granting this company aid governed by Title I of this book or a loan guarantee provided for in Articles L. 2252-1, L. 3231-4 or L. 4253-1, nor in the deliberations mentioned in the first, third and tenth paragraphs of this article.
In the event of the legal end of the term of office of the meeting, the term of office of its representatives on the Board of Directors or the Supervisory Board is extended until their replacements are appointed by the new meeting, their powers being limited to the management of day-to-day business.
The deliberative bodies of the shareholder local authorities or their groupings vote, after a debate, on the written report submitted to them at least once a year by their representatives on the Board of Directors or the Supervisory Board. This report, the content of which is specified by decree, includes general information about the company, in particular any changes to the Articles of Association, financial information, consolidated where applicable, and details of the remuneration and benefits in kind of their representatives and corporate officers. When this report is presented to the special meeting, it is immediately communicated to the deliberative bodies of the local authorities and groupings that are members, with a view to the debate mentioned in the present paragraph.
On pain of nullity, any direct acquisition of a stake by a local semi-public company in the capital of another company is subject to the prior express agreement of the local authorities and their groupings that are shareholders and have a seat on the board of directors or supervisory board pursuant to the first paragraph. The same applies to the formation of an economic interest grouping by a local semi-public company, by a company it controls or by an economic interest grouping in which it holds a share of the capital or voting rights. Indirect shareholdings that give a company controlled by a local semi-public company or an economic interest grouping in which a local semi-public company holds a share of the capital or voting rights at least 10% of the capital or voting rights of a company are also subject to this prior agreement. Other indirect shareholdings are reported by the representative of the shareholder local authority or grouping to the next deliberative assembly. Articles L. 235-2 to L. 235-14 of the Commercial Code, except where they are contrary to this chapter, shall apply to the nullity provided for in this paragraph.
A decree in the Council of State shall set the terms and conditions for the application of this article. The local semi-public companies referred to in Article L. 1522-6 are not authorised to acquire a stake in the capital of a commercial company.
