Municipal enterprises; operations

For a long time now, local authorities (cities, municipalities, counties and districts) have not only fulfilled their tasks through their actual administration, but have also used special legal forms, which the municipal laws (municipal, county and district regulations) refer to as companies. In connection with new competitive and market developments, but also in an effort to give individual areas greater independence, local authorities are increasingly outsourcing tasks from their core administration and transferring them to companies. Municipal laws recognize the following types of companies:

• Own enterprise (a special asset with its own economic management, but without its own legal personality, which is managed outside the general administration by special bodies - works committee and works management)
• the municipal enterprise (an institution under public law with its own legal personality)
• Companies in the legal forms of private law (e.g. the limited liability company - GmbH - or public limited company - AG).

Municipal company law, i.e. the sections of the municipal laws that deal with municipal companies (e.g. Articles 86 to 97 in the municipal code), essentially regulates the admissibility requirements for individual companies as well as their organization and integration into the municipal area of responsibility.

The most important prerequisite for admissibility is that the company that the municipality wishes to establish, take over or significantly expand is required for a public purpose. A public purpose includes, for example, the municipal electricity, gas and water supply or the municipal transport services. No public purpose is served by the exclusive or primary intention of making a profit. According to the municipal laws, this statement applies not only to municipal companies, but to municipal activities in general. Activities outside the so-called municipal services of general interest (e.g. municipal tourism promotion or general municipal economic development) are only permitted if their purpose is not or cannot be fulfilled just as well and economically by the private sector.