The public limited company of mixed economy combines public and private capital within the same structure. In France, this legal form allows local authorities to carry out development, housing, or public service projects while benefiting from the expertise and financing of private shareholders. The legal framework imposes a precise distribution of capital between public and private partners, which distinguishes the SEM from other local intervention tools.
Mixed capital and rules for distribution between public and private shareholders
The founding mechanism of a SEM is based on the composition of its capital. The local authority or authorities that are shareholders must hold between 50% and 85% of the shares. The remainder must be held by at least one private shareholder, who can be a company, a financial institution, or even another SEM.
This range is not insignificant. The 50% floor guarantees public control over strategic decisions: project choices, budgetary orientations, pricing policy. The 85% ceiling, set by the law of January 2, 2002, requires maintaining significant private participation. The private shareholder contributes equity, but also technical skills or operational capacity that the local authority may not always have in-house.
To delve deeper into the definition of the public limited company of mixed economy, it is important to remember that this dual participation conditions the entire governance: neither purely public nor purely private.
Legal form of the SEM and application of company law
The SEM is primarily a public limited company governed by the commercial code. It has a board of directors (or an executive board and a supervisory board), appoints an executive manager, and publishes certified annual accounts. A minimum of seven partners is required for its establishment.
This submission to common company law has a direct consequence: the SEM is subject to the same accounting, tax, and social obligations as any public limited company. It pays corporate tax, hires under private law contracts, and can be placed under judicial recovery in case of failure.
The legal regime of SEMLs (local mixed economy companies) is codified in articles L.1521-1 to L.1525-3 of the general code of local authorities. These provisions regulate the financial contributions that local authorities can grant, the control rules, and the intervention modalities. The applicable law thus overlays the commercial code and the CGCT, creating a hybrid framework that elected officials and private partners must master before any creation.
Scope of activity of local mixed economy companies
Historically, SEMLs have intervened in urban development, the construction of social housing, and the management of local public services (transport, water, parking, cultural or tourist facilities). Their scope of activity has gradually expanded.
- The development of business zones and the rehabilitation of industrial wastelands, with long-term land holding, sometimes spanning ten to twenty years, until decontamination or requalification projects are completed.
- The production of renewable energy, where the SEM allows the association of private energy operators while maintaining a public territorial anchorage.
- The operation of heating networks, parking lots, or aquatic centers, activities that combine public service missions with financial balance logic.
SEMs have become structures for long-term land risk management, particularly within the framework of the Climate and Resilience law, which imposes land sobriety on local authorities. Patient land holding, once marginal, now constitutes a significant part of their activity.
SEM, SPL, or SEMOP: arbitration between three forms of mixed economy
Since 2006 and 2010, local authorities have had two other legal vehicles: the local public company (SPL) and the single-operation mixed economy company (SEMOP). Understanding the SEM involves situating it in relation to these alternatives.
The SPL is 100% owned by public actors. It benefits from a so-called “in-house” relationship with its shareholders, allowing it to receive contracts without prior competitive bidding. In return, no private co-investment is possible, which limits the financial leverage effect.
The SEMOP, created for a unique project and a determined duration, associates a local authority with an economic operator selected through a competitive tender. It dissolves at the end of the operation.
- The SEM offers the flexibility of mixed capital and the possibility to intervene in multiple simultaneous operations, but its services must comply with public procurement competition rules.
- The SPL is suitable for local authorities that want to maintain total control without a private partner, at the cost of heavier public investment.
- The SEMOP meets a specific need, with a risk-sharing framework defined by a unique contract.
The choice between these three forms depends on the level of financial risk accepted and the willingness to involve a private partner or not. In energy transition projects, for example, the SEM remains preferred when the local authority wishes to pool investment with a specialized operator while retaining decision-making majority.
Control and governance of local authorities in a SEML
The majority shareholder local authority sits on the board of directors and exercises a weight proportional to its participation. Elected representatives vote on strategic orientations, approve accounts, and appoint the manager.
An auditor certifies the financial statements. The regional audit chambers can control the management of the SEML, particularly the financial contributions (grants, advances, loan guarantees) granted by the shareholder local authorities. These contributions are regulated by the CGCT to prevent the SEM from becoming a vector of budgetary risk for the local authority.
The dual oversight, commercial law and local authority law, imposes enhanced transparency. The deliberations of local assemblies authorizing the creation or participation in a SEM are public, and the elected administrators assume personal responsibility under the same conditions as any public limited company director.
The SEM remains a private law tool serving the public interest. Its strength lies in the balance between the democratic control exercised by elected officials and the financial discipline imposed by the commercial code. When this balance deteriorates, due to lack of oversight or excess unregulated public contributions, the structure loses precisely what justifies its mixed existence.
