The local mixed economy company relies on a precise capital structure balance between public and private actors, governed by Articles L.1521-1 to L.1525-3 of the CGCT. Before launching the procedure, we recommend mastering the governance constraints that distinguish the SEML from other local public enterprises, notably the SPL and the SEMOP.
Anti-corruption framework and Sapin II compliance in an SEML
The French Anti-Corruption Agency monitors SEMs regardless of size, pursuant to Article 3 of the Sapin II law. This point has become crucial for any creation project.
Every SEML project must integrate an anti-corruption compliance foundation from its inception. This foundation includes a risk mapping, internal control procedures, and a training plan for leaders. It is no longer just a good practice; it is a condition for securing the project.
The AFA’s control operates in two phases: systematic document collection, followed by on-site checks if the responses are insufficient. For a newly established SEM, the absence of risk mapping from the year of creation exposes it to an unfavorable report that undermines the structure’s credibility with its private partners.
We observe that local authorities that anticipate this compliance aspect even before the creation deliberation gain several months on the effective operational launch of the company. The idea that one must create a mixed economy company while treating compliance as a post-creation project remains a common mistake.
Capital and shareholder distribution: legal thresholds for a local SEM
Local authorities must hold between 50% and 85% of the share capital. This minimum and maximum are non-negotiable. The remainder goes to private shareholders, who provide both capital and operational expertise.
The SEML must necessarily take the form of a public limited company. It requires a minimum of seven partners. The minimum capital follows the common law regime for public limited companies as provided by the commercial code.
Practical consequences of the 50-85% range
A public shareholding close to 85% reduces the private partner’s ability to influence governance, which may discourage the most qualified operators. Conversely, a public participation close to 50% implies a balance of power that complicates decision-making in the board of directors.
We recommend calibrating the distribution based on the specific social purpose of the SEM. An urban development SEM that carries land risk requires a sufficiently capitalized and motivated private partner, which argues for significant private participation. A public service management SEM can operate with a smaller private shareholding.
Social purpose and scope of intervention: what the CGCT allows
The scope of intervention of an SEML historically covers urban development, construction, social housing, and the management of industrial and commercial public services. Since successive expansions, SEMLs can also intervene in economic development and the operation of cultural or tourist services.
The social purpose must remain directly linked to the competencies of the shareholder community. A municipality cannot create an SEM in a field that exclusively falls under departmental or regional competence, unless there is a formal transfer or delegation.
- Urban development and land operations, including the rehabilitation of brownfields (typical use case for SEMOP)
- Construction and management of social housing, a historical domain of SEMs since the Poincaré decrees of 1926
- Management of local public services (water, transportation, parking, sports or cultural facilities)
- Economic and tourism development actions within the competence perimeter of the community
Steps to create a local SEM: deliberation, statutes, and commissioning
The creation procedure follows a precise sequence where each step conditions the next.
- Deliberation of the deliberative assembly of the local authority authorizing the creation and setting the amount of participation in the capital
- Drafting of statutes compliant with the law on public limited companies, incorporating the specific provisions of the CGCT on the composition of the board of directors
- Identification and selection of private shareholders, with negotiation of the shareholders’ agreement and governance modalities
- Registration with the trade and companies register, followed by notification to the prefect
- Establishment of the internal control and anti-corruption compliance system before operational start-up
The deliberation constitutes the founding act. It must specify the social purpose, the amount of capital, the intended distribution between public and private, and the additional financial contributions that the community commits to provide.
Administration and control by elected officials
Representatives of the communities on the board of directors are appointed by the deliberative assembly. These elected officials sit by virtue of their office and not as common law directors, which entails specific reporting obligations to their community.
The shareholder community also has enhanced oversight rights through the annual transmission of accounts, reports from the statutory auditor, and the special report on regulated agreements. This control exceeds the classic obligations of corporate law.
SEML, SEMOP, or SPL: choosing the right structure
The SEML is not always the most suitable vehicle. The SPL, fully owned by public actors, allows for contract awards without competition (in-house contract). The SEMOP, created for a unique operation and a limited duration, associates a private operator selected through a tender process.
The choice depends on three criteria: the need for a capitalized private partner, the anticipated duration of the operation, and the community’s desire to maintain control similar to that exercised over its own services. A classic local SEM remains relevant when the project combines a long duration, a plurality of purposes, and the necessity for private input.
The legal regime of each structure has undergone several legislative adaptations since the law of July 7, 1983, notably with the SRU law of 2000, the NRE law of 2001, and the 2002 law modernizing the status of SEMLs. Each modification has strengthened transparency and control requirements, making the preparatory phase longer but governance more secure.