WeCount Team
07 June 2021
As the leading financial center on the African continent, Casablanca Finance City (CFC) has never been more in line with international best practices regarding operating methods, governance, and tax provisions.
This new direction, which aims to enhance the attractiveness of the economic and financial hub at the crossroads of the continents, is the result of a draft decree-law whose main contributions we will attempt to present to you briefly.
Adopted by Decree-Law No. 2.20.665 and published in the Official Gazette No. 6922 on October 1, the reform revolves around four new provisions, including expanding CFC status to six new activities.
These new activities eligible for CFC status include services related to collaborative financing platforms, financial investment advisors, investment companies, collective investment schemes, and trading companies, not to mention technical service providers for entities in a group of companies.
A distinction must be made between financial and non-financial companies in this group of newly eligible CFC status companies.
For the first financial companies, they are made up of credit institutions and similar, insurance companies of insurance and reinsurance brokerage and financial institutions exercising trading activities for own account or third parties and collective or individual management of portfolios of financial instruments, among others.
To this list should be added investment companies and collective investment undertakings, holding companies whose main activity consists of holding and managing holdings in the capital of companies and other providers of investment services or credit rating.
Non-financial companies include auxiliary service providers operating in auditing and legal, tax, strategic, actuarial or human resources consulting services.
Non-financial enterprises also include technical services provided in the context of industrial and commercial activities, as well as administrative service providers.
Non-financial companies also include trading companies. The latter specializes in the sale and purchase of goods on behalf of third parties.
In detail, these are activities such as trade-related services or the purchase of materials or products for resale. Trade-related services include freight forwarding and commercial advice as well as storage and networking, not to mention logistics.
In addition to the expansion of CFC status, the activities eligible for CFC status have been redefined. The scope of these activities has also been broadened.
Thus newly defined, the activities eligible for Casablanca Finance City status include operations that were previously excluded from the scope of operations authorized in the financial center.
Holding companies are now considered differently. Defined as financial companies, they are no longer required to comply with the clause that requires them to hold at least 50% of shares in African or international subsidiaries. This clause was, in fact, removed by the decree-law.
Asset management companies have also changed. Previously reserved for foreign individuals, whether resident or not in Morocco, asset management is now eligible for CFC status, whether it is intended for Moroccan or foreign individuals. Whether or not the latter are residents in Morocco is also no longer relevant.
The concept of regional and international headquarters is no longer offered by Africa's leading financial center. Since last October, this notion has been replaced by that of technical service providers.
This nomenclature gives the latter the possibility to perform services on behalf of companies outside the group to which it belongs. The previous definition given to regional and international headquarters excluded the provision of services on behalf of third parties.
Also, in this chapter, supervision and coordination activities are extended to liaison, congratulation, and centralization and control functions.
The law in question, which aims to strengthen the attractiveness of the economic and financial hub, has brought changes to the operating and governance procedures for CFC status.
The granting of CFC status is no longer the responsibility of the CFC Commission, which has been abolished since the law in question came into force. This prerogative is now vested in the governmental authority in charge of finance upon the proposal of the CFC Authority (CFCA). However, if the CFC Commission no longer exists, its members, namely Bank Al-Maghrib, AMMC, and ACAPS, must be consulted during the appraisal.
Other important innovations have been added to this list, namely the reduction of the deadline for responding to an application for CFC status from 45 days to 30 days and the limitation of the reasons that can lead to the withdrawal of CFC status for beneficiary companies.
In this regard, the new law lists the situations leading to the withdrawal of CFC status, namely at the company's request concerned or the supervisory authority concerned in the event of withdrawal of the license or authorization granted to the company. There are other cases.
For example, if the company does not use its status during the twelve months, it has been granted. The status can also be withdrawn if the beneficiary no longer carries out its main activity for at least six months.
Similarly, if the company no longer meets the conditions based on which it was granted CFC status or if it fails to meet its commitments to Casablanca Finance City, the status may be withdrawn. It should be noted that CFC status can only be revoked by the governmental authority in charge of finance on CFCA's proposal.
It should also be noted that the government authority does not automatically withdraw CFC status from offending companies.
When a beneficiary is suspected of not complying with the standards of the financial center or with the conditions for granting the status or with the commitments made, CFCA first sends a warning to the company concerned. The authority then invites the company to regularize its situation within a specific period. If the company fails to do so, the regulator may suspend the status for twelve months or withdraw it.
After a warning and if the company concerned reoffends by committing the same errors, the status can be withdrawn.
Let us briefly remind you of the conditions to be met to be eligible for CFC status.
First of all, you have six months to compile your file, as opposed to three months previously. Then, it would be best if you had an effective head office and activities in CFC according to the terms and conditions and the deadline set by the governmental authority in charge of finance upon CFCA's proposal.
Once these two steps have been completed, you still have to establish and provide a program of activity that meets the criteria set by regulation and commit to carrying it out. This is not the end of the story, as you must present sufficient guarantees regarding the organization and technical means. Add to this a solid experience in your field.
In addition to complying with the legislation and regulations in force in the financial market, you must also commit to a strict code of ethics.
Suppose you have incorporated a company in Morocco and wish to benefit from the CFC status. In that case, you will also have to commit to transmitting to CFCA all the documents and information to strengthen your file. The list is not exhaustive. (you can consult our article on this subject)
This new law is part of a logical sequence of reforms initiated by Morocco to comply with the requirements of its international partners.
It comes in addition to the abolition, in 2019, of incentives for offshore banks and offshore holdings and the modification of preferential regimes for free zones of exports and exporting companies under the 2020 Finance law.
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