How to set up a company in Morocco

Practical Guide

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Which corporate form is recommended for setting up a sole shareholder subsidiary company in Morocco and why?

As in most other jurisdictions, the equivalent of an limited liability company (LLC) also exists in Morocco, called “Société à Responsabilité Limitée” (SARL), and is often chosen as a corporate form for small and medium size projects. If there is only one shareholder, the suffix “AU” is added for “Associé Unique”, hence SARL AU.

The SARL (AU) does no longer require a minimum capital and is standardised in many ways, so the shareholders don’t have to take many decisions on the governance of the corporation. However, this standardisation also limits the shareholders in case they would like a more custom-tailored governance.

In this case, the newly regulated simplified stock company (Société Anonyme Simplifiée) is an interesting alternative, allowing shareholders to configure the company to their specific needs.

What are the requirements for capital and ownership of quotas or shares by foreign companies in Morocco?

There are no limitations for foreign owners (natural or moral persons) to hold shares of a company in Morocco.

What are the requirements for the corporate governance of the company in Morocco?

In case of the SARL, Moroccan or foreign nationals can manage the company. There can be one manager or several co-managers (individuals only, not companies). There is no board of directors by the law, and the corporate form does not allow for it either. An auditor is not compulsory if turnover stays below 50,000,000 MAD (roughly 5 Mio EUR. A general meeting of the shareholders needs to be conducted at least once a year to approve the financial statements.

What are the legal requirements a foreign company should comply with when incorporating a subsidiary in Morocco?

There are no particular requirements for foreign companies. Moroccan law treats Moroccan nationals and companies the same way as foreign companies. The general legal obligations apply.

What is the process for the incorporation of the subsidiary in Morocco?

After obtaining the negative certificate for the company necessary to secure the desired company name, the documents for the setup process need to be gathered, mainly the passports of the shareholders (if natural persons) or their articles and commercial registry extract (in case of companies), as well as ID documents of the future manager(s). The company needs an address. It can a premise in property or rent, or based on a domiciliation agreement with a licensed domiciliation company. The company also needs a bank account. If – in the case of an SARL – the starting capital of the company is above 100.000 MAD, the bank needs to provide a certificate proving the deposit and blockage of the company capital on the account. This can sometimes cause delays since banks are strict on evidence of the ultimate beneficial owners of the shareholders. The articles will then be drafted in French or Arabic and signed by the shareholder/s together with other constituting documents. This can easily be done in Morocco with the corresponding legalization of the signature before a public authority. Signing can also take place remotely, using the Apostille or other legalization procedures as the case may be. The whole package is then submitted to the tax authorities and the commercial register. Finally, it is important to file the corresponding investment declaration to the foreign exchange authority.

What are the usual challenges for foreign companies setting up a subsidiary in Morocco?

Moroccan law is generally open to foreign investment. Foreign investors are welcome and public authorities ready to assist. However, it is very important to fulfil formal requirements. Certifications, legalisations, stamps, precise data etc. are taken seriously, and if not observed, the process of setting up or any other later procedure can be delayed.

Moreover, while not necessary from a legal point of view, it is recommendable to have a person on the ground who is well-versed with local customs, has his/her networks in the sector, and speaks the local languages. There are excellent professionals on the ground, often with international experience, but you must choose well.

Strictly (!) complying with the foreign exchange (FX) obligations is another sensitive issue, often neglected by foreigners. If you do, getting capital back out the expatriating dividends is easy. If not and can be a nightmare and delay expatriation of funds for years.

Litigation before the Moroccan courts should be avoided. If possible, and if viable economically, chose arbitration from the outset of a contractual relationship.

Be patient. Some things take longer in Morocco, but this is not the Wild West. The country has managed an enormous leap forward in many areas in the past 10 years. Some important preconditions for a competitive economy are still lagging behind, but the government is undertaking notable efforts to tackle those issues.

Foreign investors should also be aware of three red lines: The King, Islam and the Territory should not be questioned or ridiculed. Both for the government and for most people, those are three important pillars of identity which people expect visitors to respect.

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