For quite some time, the governance of municipal corporations has been criticized on the grounds of its lack of transparency and its weak mechanisms of accountability. However, despite the fact that municipal ownership of corporations has become an increasingly controversial issue, the number of municipal corporations has grown, as has also the extent to which they are perceived as a source of unfair competition with private corporations on open markets. This article poses critical questions concerning municipalities as corporate owners and addresses the prerequisites of accountability. Empirically grounded in an explorative case study, four policy-recommendations are generated for the municipal sector as a whole: 1) municipalities should continuously oversee the sector’s corporate structure; 2) an ongoing process towards greater transparency and accessibility is desirable; 3) municipalities must establish a transparent process for appointing the boards of their corporations, and politicians joining them must be offered appropriate briefing and training; and lastly, 4) a critical awareness about the potential democratic dilemmas associated with the public ownership of corporations must be estab- lished among senior politicians. If these recommendations are neglected, there is a risk that the democratic legitimacy of the activities associated with municipal corporations will be eroded.