The composition of the boards of municipally owned companies is a topic that inevitably resurfaces after local elections. Who gets a seat at the boardroom table? These positions can be filled based on political representation, administrative leadership, or external expertise — and each approach brings both justification and risk.
Appointing elected officials to municipal company boards is a traditional and, in some respects, reasonable practice. Political parties are elected to represent the will of the people, and it’s natural that individuals who ran for office or otherwise proved themselves are nominated to serve on governing bodies. From a democratic standpoint, this adds transparency and reinforces public accountability. Local politicians often have deep knowledge of their community’s needs and priorities, and they can bring a broad understanding that goes beyond the interests of a single company to reflect the views and expectations of residents.
Effective board work requires strategic thinking, financial literacy and risk assessment skills.
On the other hand, boards filled purely on political grounds can suffer from a lack of competence. Effective board work in a limited liability company requires strategic thinking, financial literacy, risk assessment skills, and the ability to prioritize the company’s long-term interests over short-term political messaging. If board seats are distributed strictly according to party proportionality, without requiring relevant knowledge or governance experience, the risk is that the board won’t function at the level needed to serve the company’s best interest. Furthermore, politicization can lead to tension when political logic clashes with corporate goals.
Appointing senior municipal officials to company boards is another way to reinforce the connection between the municipality’s strategic direction and the governance of its companies. A town mayor or department director typically understands the municipality’s entire structure, the framework of public administration, and the responsibility to serve the public interest. These individuals can act as bridges between the company and the broader municipal organization. They operate under professional ethics and statutory duty, not political agendas, which can provide stability and balance to board dynamics.
However, time is a major constraint. Senior officials are already stretched thin, and adding responsibilities on multiple boards may be asking too much. Will there be enough focus on developing the company if ownership oversight dominates their role? Role conflicts may also emerge — can someone act independently if they are simultaneously a preparer of decisions and an overseer? Legal conflicts of interest can arise if the same individual has duties within both the municipality and the company. These issues can be managed with good governance structures, but they’re not without complexity.
A third option is to appoint external board professionals. These individuals often bring deep experience in business, governance, strategy, and risk management. This kind of expertise — and the networks that come with it — can be especially valuable when municipal companies operate in competitive markets or oversee complex infrastructure projects. An external expert can offer fresh insight and act as a neutral advisor, free from political affiliations or local entanglements.
At the same time, external board members may be disconnected from the day-to-day reality of the municipality. They may lack understanding of local needs, strategic municipal goals, or the unique nature of public service. Do they grasp that a municipally owned company may not always act purely on market terms, but must sometimes fulfill broader societal obligations? There’s also a financial aspect — professional board members command higher compensation. For municipalities already under fiscal pressure, it may be hard to justify these costs, no matter how skilled the appointees.
It’s also important to remember that politicians are not just “career politicians.” Many come from business, law, education, and other professions, and bring substantial real-world experience, including previous board service. The political class often includes skilled board professionals, entrepreneurs, and seasoned experts in their own right.
In the end, this isn’t a question of whether board seats should go to politicians, civil servants, or external experts. The real issue is: who brings the most value to the company’s strategic direction, risk management, and broader societal purpose? Political representation matters in a democratic society, but it must be balanced with competent, professional governance — not symbolic appointments.
The most effective board for a municipally owned company is one that blends local insight, administrative experience, and business acumen. This often means striking a balance between elected officials, public administrators, and outside professionals — not framing it as a contest between them, but as a shared responsibility.