Municipalities, or speaking more broadly, local government units, may perform their tasks relating to municipal services management through commercial law companies (pursuant to Article 9 par. 1 of the Municipal Services Management Act – joint-stock companies or limited liability companies) it established. Selecting a specific tool for performing the tasks of the local government unit is the responsibility of the decision-making body of that unit.In need of a resolutionEstablishing a commercial law company by the municipality is one of the basic legal forms of performing the municipality’s tasks in the public utility field. A decision to delegate public tasks to the company being established is made by way of a relevant resolution adopted by the municipal authority and an amendment to the deed of foundation of the company (i.e. the articles of association of a limited liability company and the statute of a joint-stock company). At the time of establishment, such a company is provided with the assets (share capital) necessary to carry out its business. With this form of performing municipality’s tasks it is important for the established company to have its own legal personality separate to that of the municipality as such. From a formal and legal point of view, we are dealing with two individual legal entities, however, it must be remembered that the established company remains a subsidiary of the municipality. The municipality has ownership rights to the company and the function of the (general) meeting of shareholders is fulfilled by the executive branch of the municipality. Therefore, the municipality still has a decisive influence on the affairs of the company it established and the company performs the municipality’s tasks relating to municipal services management on its own behalf and for its own account, using contributed or entrusted municipal assets for this purpose.The company’s assets are a key issue as regards municipal companies. It is assumed that only those legal persons whose whole capital consists of municipal property can be classified as municipal legal persons, because only then the municipality can have exclusive powers to make decisions about the affairs of such a business unit (has full control over the company) and should it be wound up, the entire property left would become part of the municipality’s property. Moreover, the company must be established to carry out specific tasks of the municipality, which should be reflected in a relevant resolution of the municipality and in the company’s deed of foundation. Although the company remains a full subsidiary of the founding body, the fact that the municipality contributed municipal real estate to the municipal company may be considered by an administrative court as disposal within the meaning of Article 34 par. 1 read together with Article 4 pt 3b of the Act on Real Estate Management.Tenant’s rightIn accordance with Article 34 par. 1 pt. 3 of the Act on Real Estate Management, if real estate is disposed of for the benefit of individuals and legal persons, the right of priority in acquiring it lies with the tenant of the dwelling with a lease for an indefinite term. In turn, Article 4 par. 3b of the Act on Real Estate Management states that disposal of real estate should be understood as legal transactions which form the basis for the transfer of the ownership of the real estate.It is assumed that contributing a building to a municipal company always constitutes disposal where the local government is not the only entity holding rights in that company, so the tenants of the municipal flats in that building should be informed of the intention to perform such a transaction since they have priority in purchasing the flats they occupy. The entitled person is informed in writing that the real estate is intended for disposal and that he or she has priority in purchasing that real estate, provided that he or she files a request for purchase by the deadline specified in the notification. Contributing municipal real estate without following the procedure defined in Article 34 of the Act on Real Estate Management is, according to the court, a violation of the legal interest of the tenant of the dwelling.However, what happens if the municipality is the only owner of the company to whom municipal real estate is contributed? As indicated by the Supreme Administrative Court in its judgement of 24 January 2012 (Case File No. I OSK 1917/11), although the municipality is the only owner of the company, the real estate contributed is the property of the company, and not of the town. Moreover, the company is a legal entity which is not obliged to respect the priority right to purchase real estate conferred on the persons listed in Article 34 par. 1 of the Act on Real Estate Management. Therefore, the tenants of the municipal flats should be informed of the intention to make a contribution in kind to the company and of their priority to purchase the real estate. It is only after the entitled tenants have failed to exercise their priority right to purchase the real estate that a relevant resolution may be adopted and the municipal real estate may be contributed to the municipal company.