Karim Hemras
02 September 2019
Morocco is a country renowned for its openness to foreign investment and, as such, occupies the third position in Africa in the World Bank's Doing business 2019 ranking.
Indeed, setting up a company in Morocco is quite straightforward as It takes only a few days to submit your incorporation file and register a private limited company or a public limited company.
This situation allows investors, whether local or foreign, to quickly become operational and start focusing on Morocco business opportunities.
That said, incorporating a company will require thorough preparation beforehand as well as bespoke support to avoid any potential complications during the incorporation procedure.
In this context, we will review the different steps to create a company and start a business in Morocco.
Foreign companies have a choice between several legal form to carry out their activities in Morocco. The different types of companies in Morocco fall into three main categories:
- Partnerships: general partnership, limited partnership, and joint venture.
- Capital companies: private limited company, public limited company, simplified public limited company, and limited partnership with shares.
- Branch office
In practice, the most commonly used legal forms of companies in Morocco are the Limited Liability Company (SARL) and the Public Limited Company (SA).
The LLC is the legal structure usually chosen by investors since it accounts for more than 97% of the 162,877 companies incorporated during the period 2010-2014 according to the Moroccan Office of Industrial and Commercial Property (OMPIC).
For these reasons, we will only explain the characteristics of the LLC, PLC, and branch:
The LLC or Limited Liability Company is a legal entity with legal personality. It can be incorporated by a single shareholder (referred to as a SARL with a sole shareholder) or by several shareholders.
This legal form is generally adapted to small business and medium-sized enterprises and has the following key characteristics:
- Non-free transferability, except between spouses, parents, and the non-negotiability of shares,
- A minimum of two founding partners, except for SARL with single shareholder,
- There is no limit in terms of minimum share capital. However, it is preferable for credibility sake towards your future partners (banks, customers, suppliers) to have a share capital of at least 100 000 MAD.
- The director(s) of the LLC is not required to be resident in Morocco or to hold shares in the said company.
If the turnover (excluding tax) of the LLC exceeds MAD 50,000,000, an auditor must be appointed.
It is the second most common legal form in Morocco in which shareholders hold negotiable security (share) and have liability for losses limited to the amount of their contribution.
The main characteristics of the SA are:
- the free transfer and negotiability of the shares,
- a minimum of 5 shareholders,
- the minimum share capital of 300,000 MAD or 3,000,000 MAD in the event of a public offer,
- An auditor must be appointed.
There are two types of public limited companies:
This legal form is particularly suitable for the implementation of joint projects between several companies. A minimum of two shareholders is required. The minimum share capital is the same as that of the SA.
The shareholders of the SAS must be companies whose share capital is at least MAD2,000,000, i.e., the exchange value in foreign currencies.
A SAS is a public limited company that is not bound by restrictive rules such as those of a public limited company or a limited liability company. The provisions relating to management are d in the Articles of Association. The only obligation is to appoint a president.
A branch is a company created by a foreign parent company. As such, it has no legal autonomy (legal personality) or assets (own property or share capital) separate from the parent company.
The branch is led by the head office legal representative, who is usually an employee.
As the LLC (SARL) is the legal form most used by investors in Morocco, we will describe its incorporation procedure. The incorporation of SA and branch offices will be the subject of another blog article.
The negative certificate is an administrative document issued by the Moroccan Office of Industrial and Commercial Property (OMPIC). This administration stands as Morocco company search or Morocco business directory and updates regularly the list of company in morocco.
It certifies that the trade name requested by the investor is available and can be registered in the commercial register.
The application for the negative certificate is submitted online through the OMPIC website, and its validity period has recently been reduced to 90 days.
To be duly registered, any company in Morocco must have a registered office address.
In this regard, Two options are available :
- Rent premises by signing a commercial lease agreement;
- Be domiciled in a business center.
Domiciliation is usually the most popular option for companies because of its low cost and simplicity. Indeed, 72% of newly created companies in Casablanca used domiciliation during their start-up phase, according to estimates by the Moroccan Association of Business Centres (AMCA).
This procedure is mandatory for SAs and LLCs whose paid up capital exceeds MAD 100,000.
It involves opening a temporary bank account in a local bank where the company's share capital is transferred.
Once the transfer completed, the bank issues a certificate of capital freezing.
Drafting the company's articles of association is the most critical step in Morocco company formation.
Indeed, the articles of association are the company's constitutive documents and cover all the rules governing both relations between shareholders and relationships with third parties. It is an essential document that will define the rules that will guide your company and will represent the " constitution " of your company.
This document can be drafted in two different ways:
- Have the entire articles of association prepared by a professional (chartered accountant or corporate lawyer),
- Write the articles of association of your company yourself.
It is recommended to hire a professional to draft them to avoid any potential inconveniences or unpleasant surprises with the commercial court.
In practice, the use of standard models (which are easily found on the Internet) is not a good idea. Indeed, these models will never fit with the specificities of your company and its operating model.
Once the drafting of the articles of association completed, the founding partners may sign the final bylaws without being physically present in Morocco.
The required documents by Morocco company registry (CRI) are the following:
All the incorporation documents are then filed with the regional investment center (CRI) in the city where the company's registered office is located.
The CRI acts as a one-stop-shop for the incorporation of companies in Morocco and brings together the services of the tribunal of commerce, Tax Authorities, Morocco company search (OMPIC), and the Social Security (CNSS).
In practice, the company is usually incorporated within one week to 10 days from the date of filing.
The documents issued by the CRI include:
- A notification form of the company's identifiers;
- A certificate of registration for the professional tax,
- A declaration of existence issued by the tax administration;
- A certificate of registration from the National Social Security Fund (CNSS)
- Original copies of the duly registered articles of association.
The commercial register issues the trade register extract called Model J within one week of the company's incorporation.
Once the company incorporated, the formalities of legal publication in a newspaper and the official bulletin must be completed.
Once these steps completed, the entire incorporation file is sent to the bank for the opening of a final business bank account.
Under foreign exchange regulations, foreign investors are allowed to freely transfer abroad all the proceeds of their investments in Morocco (dividends, the sale price of shares and liquidation income) as far as the initial investment is made in one of the foreign currencies listed by the Moroccan central bank.
To be able to benefit from the subsequent transfer of dividends abroad, a report of the foreign investment in Morocco must be submitted to the foreign exchange office (Office des Changes) .
Finally, the last tasks to be carried out are to order a seal for your company and choose an accounting firm for the bookkeeping and tax compliance.
Please feel free to get in touch with us should you need any further information with regards to the incorporation of your company in Morocco.
Karim Hemras
is a CPA and tax advisor. He is the founder of WeCount.ma, the accountig firm that helps foreign companies with their accounting, payroll and tax compliance, so that they can grow confidently in Morocco and Africa.
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