What type of company do we need in Morocco?

11 May 2021 - Christian Steiner

Once it has been decided that an agency only or a branch office is not suitable for the needs of entering the North African market, we have a wide range of companies available in Morocco that are familiar to us from continental European law. Moroccan corporate law provides for the following types of companies: 

– the Public Limited Company (regulated by Law n. 17-95), 

– the General Partnership, 

– the Limited Partnership, 

– the Limited Joint-Stock Company,

– the Limited Liability Company and the Joint-Stock Company (all regulated by Law n. 17-95). 

(all regulated by Law 5-96). 

The companies differ mainly in terms of the number of shareholders required, the maximum duration of the company, the content of the articles of association and the minimum share capital required for incorporation.

Once it has been decided that an agency only or a branch office is not suitable for the needs of entering the North African market, we have a wide range of companies available in Morocco that are familiar to us from continental European law. Moroccan corporate law provides for the following types of companies: 

– the Public Limited Company (regulated by Law n. 17-95), 

– the General Partnership, 

– the Limited Partnership, 

– the Limited Joint-Stock Company,

– the Limited Liability Company and the Joint-Stock Company (all regulated by Law n. 17-95). 

(all regulated by Law 5-96). 

The companies differ mainly in terms of the number of shareholders required, the maximum duration of the company, the content of the articles of association and the minimum share capital required for incorporation.

What are the most common types of companies used by foreign entrepreneurs investing in Morocco?The most commonly used companies in Morocco are the Limited Liability Company (Société à Responsabilité Limitée, SARL) and the Public Limited Company (Société Anonyme, SA).

What are the characteristics of a public limited company? 

A public limited company is a trading company whose capital is divided into negotiable shares, which represent the capital contributions of the shareholders. The latter, also called shareholders, must be at least five in number and are liable for the company’s obligations limited to the part of the capital contributed. The creation of a public limited company requires a minimum share capital of 3,000,000 Dirhams, if the company is listed; otherwise, the required capital is reduced to 300,000 Dirhams. The company’s articles of association must be formalised in writing and signed by all shareholders. Two main bodies manage the public limited company: the shareholders’ meeting and the board of directors. Law 17-59, in addition to identifying the fundamental characteristics of the joint stock company, requires a number of obligations in terms of transparency and external control, the non-compliance with which entails criminal consequences for the company’s directors. Due to its characteristics and requirements, which are considerably more complex than those of SARLs, the SA is usually activated for large-scale business projects.

What are the characteristics of the Limited Liability Company in Morocco?

The Limited Liability Company is the most common type of company in Morocco. It is a commercial company and acquires legal personality after registration in the corresponding Commercial Register. The number of partners can vary from a minimum of one, in which case it will be a sole proprietorship, to a maximum of 50. When the number of partners exceeds 50, the company must necessarily become a public company. The partners are free to determine in the articles of association the amount of the share capital initially contributed. There is no longer a minimum. The share capital must be deposited in a blocked bank account if it exceeds MAD 10,000, from which it cannot be withdrawn until the company is registered in the Commercial Register. Shareholders’ contributions may also be in kind, in which case they are valued by an auditor (commissaire aux compts). 

Except in exceptional cases, the liability of the partners is limited to the part of the capital contributed. The SARL’s articles of association must be in writing, legalised, and must contain at least the type of activity or corporate purpose, the company’s registered office and tax domicile, and the identification of the company’s director(s) (it should be noted that it is not compulsory to be a shareholder in order to become a director). When the company is not a sole proprietorship, the partners must determine in the articles of association the liability regime to which they are subject.

What are the formalities required for the incorporation of a company in Morocco?

To reserve the preferred name of the company, it is necessary to obtain a Negative Certificate of Denomination. 

The articles of association are the key to the proper functioning of the company. It is here that the greatest attention must be paid because errors in the internal rules of the company can hinder the proper functioning of the company, literally forever or even the dissolution of the company when the partners are unable to agree. The law establishes some mandatory rules that are at the discretion of the partners. Other provisions are dispositive. 

As proof of the company’s domicile, the authorities require the production of a rental contract in the name of the company or a temporary domiciliation contract, the latter being valid only provisionally for six months. 

Once the registration has been submitted to the competent Regional Tax Directorate, the latter issues a tax certificate indicating, among other things, the type of activity carried out by the company and the date of commencement, the tax address and number. 

Entry in the Commercial Register is necessary for the company to acquire legal personality.  

This enables the company’s existence to be declared to the tax authorities. This administrative procedure, which can be carried out at the local sub-directorate of the Tax Administration or at the Regional Investment Centres, consists of assigning a tax identification number to the company, which must be compulsorily indicated on all invoices, reports and documents issued by the company. 

In order to be effective vis-à-vis third parties, the incorporation of the company must be published in a local newspaper or periodical and in the official gazette. 

Before the first employment relationship is entered into, the company must be registered with the Labour Inspectorate and affiliated to the National Social Security Fund.

Companies are required to open a current account with a Moroccan financial institution. The management of the procedures listed above, all of which are necessary in the most common case of the creation of a commercial company, is not extremely complex (except, on occasion, the drafting of the articles of association), but they do require attention to detail, signatures, stamps, legalisations, an inevitable legal folklore for the birth of a new person with legal autonomy.

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