That information is surprisingly hard to find. I'm Emperor and one seems to have been taken and I don't know which.
There is also no real restriction beyond beyond being a single province. The Emperor can give out the Free City status to whomever he chooses. So it's not like you need to liberate *that particular* Free City if you want more of them.
Can't be a Monarch government, nor a Theocracy, apparently.
That white-ish thing is called a flag. Or it might also be a pennant.EDIT: here you can see the Free Cities with that white-ish thing I mentioned showing their Free City status:
It's probably a pennant as you say, didn't know how to describe it, thanks.That white-ish thing is called a flag. Or it might also be a pennant.