Related parties
Municipalities perform a variety of tasks to serve the public interest. Performing those duties can be done in a variety of ways:
- by performing the tasks themselves;
- by outsourcing tasks to another organization and
- by participating in a related party.
When municipalities perform tasks themselves within a municipal service, the municipality bears all financial and all operational risks.
Outsourcing tasks can be done through the provision of subsidies or by concluding contracts. These are normally preceded by a tender.
Municipalities can also perform tasks through "related parties. A related party is an organization under private or public law in which the municipality has an administrative and a financial interest.
A financial interest implies: if the municipality is liable in the event of non-performance of obligations or an amount made available to the related party that cannot be claimed (by the municipality) if the related party goes bankrupt.
A managerial interest means if the municipality has control in the organization in question, for example, if an Alderman, council member or official sits on the board or votes on behalf of the municipality.
Different types of related parties can be distinguished within Kerkrade: Joint Arrangements (GR), Public Limited Companies (NV) and Private Limited Companies (BV). The choice of a specific legal form depends in part on the objective to be achieved.
Reasons for participation in related parties
Possible reasons for participating in a related party include: risk spreading (sharing financial risks with others), efficiency benefits, knowledge benefits and the so-called catalyst function (initiating activities that would not be possible without the municipality's role as initiator).
Possible dangers lie mainly in the loss of control and the dual role of the municipality. Think of financial risks, directors' liability, lack of information and therefore reduced possibilities for influence.
Information common arrangements
Joint Arrangements (GRs) are related parties based on public law. A joint arrangement is basically "extended local government"; several municipalities join forces and bring the performance of municipal tasks under a joint arrangement.