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Incorporation

Setting up a company in Morocco

When setting up a company you may want to consider these factors:

  1. Business Factors

    Generally, Morocco does not impose any restrictions on foreigners wishing to invest in the country. In deciding on whether to invest in Morocco, you may also want to consider the following when making your decision :-

    • The industry and type of business that will be conducted
    • Nationality of the headquarters / individuals (s)
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your need.

Your Options

There are three types of business forms available to foreign companies in Morocco. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Morocco and the planned business activity.

When setting up a company in Morocco, you have the following options:-

  • Corporation
  • Branch Office
  • Liaison Office

This article provides a general guideline for foreign businesses on entering Morocco for business purposes. In particular, it looks at common pathways to establishing a business presence in Morocco, generally through a corporation, branch office or liaison office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Moroccan economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.

Data is based on the time of writing, November 2015 or closest available dates.

Corporation

In Morocco, there are two main types of corporations (registered companies) that can be set up:

  • Private limited company
  • Public limited company

1.Private limited company (S.a.r.l.) [société à responsabilité limitée]

Investment capital requirements 

There is no minimum capital requirement for foreign investors intending to establish a private limited company in Morocco, with the share capital free to be set in the by-laws by its partners. However, it is common practice that the standard share capital is set as MAD 10,000. 25% of the share capital must be paid up upon set-up. Shares in the S.a.r.l. are divided into shares with equal par value, which must all be subscribed by the partners. The maximum amount of shareholders a S.a.r.l. may have is 50. The sole shareholder of the S.a.r.l. also cannot be another S.a.r.l. formed by a single person.

Funds from paid  up capital are deposited into a blocked bank account within the 8 days following their receipt if the fixed share capital exceeds MAD 100,000. They can only be withdrawn after registration with the Trade Register

Contributions made in kind must be fully paid-up.

Shares are freely transferable by inheritance and between partners, spouses, parents, and allies, but can only be transferred to a third party after approval by the majority of the partners owning at least ¾ of shares.

Management

Management of a S.a.r.l. can be assumed by one or more natural persons. The managers (gérants), may be appointed by the articles of association or by a 3/4 majority decision of shareholders. They may also be chosen among the shareholders themselves or third parties. The managers make all management decisions on behalf of the company and he/she may be held personally liable under civil and criminal law to the company or third parties.

Generally, there are no management restrictions for foreign nationals, except in certain specific business sectors (for example, pharmaceuticals).

Accounting / auditing requirements

The company’s annual accounts and management report must be filed with the clerk of the Commercial Court within six months of the end of the fiscal year and within 30 days of the ordinary shareholders meeting (if the annual accounts have not been approved, a copy of the minutes of the meeting must be filed).

There are several reporting requirements to the Trade Registrar, such as filing:

  • Approval of the annual accounts.

  • Financial statements.

  • Management reports.

  • Auditors’ reports on the financial statements.

Companies with an annual turnover exceeding MAD 50 million must appoint at least one auditor.

2. Public limited company (S.A.) [Société Anonyme]

Investment capital requirements

Incorporation of an SA requires a minimum of 5 shareholders and a minimum of MAD 300,000 [MAD 3,000,000 for publicly traded S.A.s]. 100% of the capital must be fully subscribed during incorporation, however only 25% of this must be paid up with the remaining 75% paid up within the following three years. All contributions in kind must be fully paid up when issued. Shares can only be publicly traded once the corporation has registered with the Trade Register or after a capital increase. The par value of the shares cannot be less than MAD 50. However, the minimum par value for publicly traded S.A.s is MAD 10.

Management

The Executive Board (directoire) consists of a maximum of 5 members (who must be natural persons) [7 for quoted companies] who appointed by the Supervisory Board. They may not necessarily be shareholders of the company. However, only one member is required if the company has a share capital less than EUR 150,000. They have a tenure of 4 years.

The Supervisory Board (conseil de surveillance) consists of at least 3 members and a maximum of 12, appointed in the company’s by-laws. Members are elected by shareholders during the Ordinary General Meeting. Members of the Supervisory Board cannot also be named to the Executive Board. The Supervisory Board has permanent control over the Executive Board and defines major business goals.

Accounting / auditing requirements

One or more auditors will be assigned to the monitoring and follow-up of the business’s corporate account.

3. Simplified public limited company (S.A.S.) [Société Anonyme Simplifiee]

A simplified public limited company is a company consisting of two or more companies with a view to creating or managing a common subsidiary, or to creating a company which will become their common parent company.

Investment capital requirements

Each partner must contribute a minimum capital of MAD 2,000,000. The S.A.S. is formed through by-laws signed by all its partners.

All the fixed capital must be fully-paid up during the time the by-laws are signed. The S.A.S. is also not permitted to trade on a stock exchange.

Management

The president (who can be a legal person) is initially appointed by the company’s by-laws. Thereafter, he or she will be appointed in the manner described in the by-laws.

Steps for Incorporation

Incorporation in Morocco is a relatively quick and straightforward process.

Step 1: Obtaining a “Certificat Négatif” online, which registers the company name at the Regional Investment Center (CRI, Centre Regional d’Investissement)

The Certificat Négatif is proof that the business name required is not already in use and that it may be registered with the Trade Register. It is issued by the OMPIC (Moroccan Industrial and Commercial Property Office) and is valid for one year. After one year, negative certificates that have not been submitted for registration with the Trade Register will be cancelled while negative certificates that have not been collected will be cancelled after one month.

Documents required: Completed application form (the form is initially provided by the CRI), National identification card or passport, Photocopy of the national identification card or passport if the investor is being represented by another person.

The certificat négatif can be obtained in person or online here.

Agency: CRI

Time: 1 day

Cost: MAD 230 (MAD 210 + MAD 20 droits de timbres)

Step 2: Establishment of the company by-laws and completion of company subscription form 

The by-laws are a group of contractual provisions which define the rules applicable to a specific legal situation. They can take one of two forms: notarial or private deed. The subscription form is a document to be filled in the case of a contribution to the formation of a business’s capital. It includes a cash pledge.

Agency: Private law firms

Time: Varies

Cost: Varies

Step 4: Freezing of paid-up capital

The deposit must be made within 8 days after the company has received the funds. A freeze certificate will be issued by the bank.

Documents required: S.A. and S.A.Ss will require the company by-laws, negative certificate, identification, subscription forms. S.a.r.l.s will require all documents except the company subscription form. Subsequently, the company will need to draw up the statement of subscription and payment.

Agency: Private law firms, bank

Time: Varies

Cost: Varies

Step 5: File documents with CRI to register with the Ministry of Finance for patent tax, with the Tribunal of Commerce, and for social security and taxation

The applicant is required to download a single declaration form for setting up a busienss  (formulaire unique declaration de création d’entreprise) from the Internet. After completing the form, the applicant files the incorporation documents at the CRI. The Centre Regional d’Investissement (CRI) acts as a central processing centre for the following procedures:

  • Deposit of bylaws and registration at the Tribunal of Commerce and the Company Registrar.
  • “Patente” tax number.
  • Publication of two announcements in the journal of legal notices and the official bulletin
  • Declaration of fiscal existence.
  • Social security registration.
  • Legalisation of legal books.

Deposit of by-laws

Documents required:

• By-laws
• Rent contract or deed of purchase
• The minutes of the appointment of the manager or of the nomination of the president, auditors, or administrators

Cost:

  • For the by-laws: 1% of capital (low charge of MAD 1000) or a fixed charge of MAD 1000 when the social capital does not exceed MAD 500,000.
  • MAD 200 for the rent contract
  • MAD 200 for the minutes

Corporate tax registration

Documents required:

  • Agreement or permission for regulated activities
  • Agreement in principle for classified establishments
  • Rent contract or deed of purchase, or domiciliation attestation by a legal person

Cost: No charge

Trade registration at the commercial trade registry

Cost: MAD 350

Social security registration

Cost: No charge

Publication in the Journal of Legal Notices and Official Bulletin

Once registered with the Trade Register, the applicant is required to make two publications: one in the Journal of Legal Notices and one in the Official Bulletin within a month of the company’s registration.

When submitting the form and all documents, the applicant is required to include the text for publication in both publications in typed Arabic. Although the announcement is published in the Official Gazette in 30 days, a receipt from submitting the publication is sufficient for filing the registration documents with the Tribunal of Commerce.

Cost: Variable. DH 150 publication fee (DH 8-9/ line in business paper, DH4/ line in the official bulletin).

The applicant will receive the “patente,” the fiscal identification, the commercial registration certificate, legal books, and the social security registration (CNSS registration) after about one week.

Step 6: Obtain a company seal

Agency: Seal makers

Time: 1 day

Cost: MAD 200

For more information on the incorporation process, please refer here.

 

Branch office

Foreign corporations operating in Morocco can operate as a branch office (succursales) without the need to incorporate. However, it is generally advisable to incorporate rather than set up a branch office in Morocco, given the numerous drawbacks associated with having a branch office.

It is sometimes advisable to form a separate corporation abroad to act as the head office of the Moroccan branch for various reasons, including tax considerations. In general, a branch office may be suitable for the following situations:

1) Where a specific contract project is involved and no future commercial or industrial activity in Morocco is planned

2) Where the duration of the contract or project is for a limited period, for instance up to two or three years (not applicable to waste water treatment services).

Investment capital requirement and management 

There is no minimum level of investment capital and only one branch manager is required.

Steps for setting up a branch

While some investors may feel that setting up a branch is simpler, in practice it is neither simpler nor quicker to form a branch than to set up a limited liability company.

A branch is not recognised as a separate legal entity under Moroccan corporate legislation. As such, it is required to legally appoint a representative to act on its behalf in Morocco. The powers of the legal representative must be clearly defined in writing and a notary public or the Moroccan Embassy/Consulate in the country of origin must authenticate the signatures of head office officials empowered to delegate such powers to the local representative. Furthermore, the branch is subject to all laws applicable to its foreign parent company.

Before opening a branch in Morocco, the foreign parent must file two certified copies of its articles, which have been translated into French with the Commercial Court. Each year, the foreign company also has to furnish two certified true copies of its accounts [translated into French].

Branch profits are also subject to branch remittance tax of 15%, unless a reduced rate is available under an applicable Double Tax Treaty.

Liason office

A liaison office (bureau de liaison) is not an independent legal entity and hence, may not conduct direct commercial or revenue-generating activities with the execution of contracts, receipt of funds, sale or purchase of goods, or provision of services. Its sole purpose is to collect market information and promote the foreign corporation’s business.

Liaison offices must be registered with the Trade Register and their managing directors must have business permits.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Morocco, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Morocco, they must also decide whether they will administer that employment internally or use a Global Employment Organisation to handle payroll and employment responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Morocco
  • the company needs help with tax, employment, immigration and payroll compliance in Morocco

The complexity of employment regulations in Morocco makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Morocco allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Morocco.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Morocco. Read more about outsourced employment through Shield GEO.

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