Interview: Romain Berthon and Lina Fassi Fihri
What can be done to streamline the process of transactions and improve transparency?
ROMAIN BERTHON: The price and value of land are major issues in real estate transactions. The price is the basis of the calculation of the registration tax applied to sales. If the price declared to the tax administration is lower than the price that the parties actually agreed upon, or the market value of the asset, the tax administration may reassess the price and penalties may apply. Such provisions unfairly apply to parties acting in good faith, i.e. parties who declared the actual price they agreed on, and who considered that such a price was the market value of the sold asset.
Price and value are also commercial and consumer protection issues; no substantive studies or public surveys exist on the market value of real estate assets based on their location or nature. However, many public and private bodies are now willing to provide transparency on price. An administrative authority has launched a survey on the prices of real estate assets in Casablanca; the tax administration seems to be considering publishing its price tables on which reassessments are based; and private partnerships have been created to conduct and publish a survey on the price of offices in Casablanca.
From a business prospective, what measures might improve judicial governance and reduce opacity?
BERTHON: Some decisions by Moroccan jurisdictions are not understood by the business world. Sometimes this is because businesses do not fully understand legal issues. In such circumstances, lawyers have a duty to enlighten their clients and provide a complete explanation. Confusion may occur because some judges are not attuned to the business world, as they cannot be specialised in all areas of law. It can also occur because it is difficult to access case law. To address these issues, work is being undertaken to provide education and training in business law to both business and judicial bodies, and to gather and publish case law.
In which areas do you see the greatest need for strengthening investor rights in Morocco?
BERTHON: In the main, foreign investors’ rights are equal to those of Moroccan investors. This means Moroccan investors do not legally benefit from greater voting rights than foreign investors in a company.
Nevertheless, there might be some practical difficulties for foreign investors in signing, in their respective countries, the documentation for the creation and functioning of the company. For this purpose legalisation is often required. This means the concerned signatory shall have its signature on each document legalised in front of a Moroccan authority, or a foreign authority recognised as such from a Moroccan point of view. More recognised foreign authorities would ease foreign investor legalisation. Moreover, foreign investors may find it uncomfortable to have their dispute resolved by Moroccan courts only. This issue is often addressed by including arbitration clauses in contracts. Finally, all of the work which is currently on the verge of completion by the Moroccan administration to limit the interpretation hazard with respect to laws and regulations is welcome, especially as far as foreign exchanges rules are concerned.
Is there room to reduce the burden for start-ups?
BERTHON: Regional investment centres gather the documentation for creating companies. The documents are then dispatched to the concerned administrations (commercial registry, tax administrations, etc.). Several things could ease the creation of commercial companies. For example, the number of required documents could be reduced, and relationships between the concerned administrations could be tightened. For example, representatives of these administrations could have a desk in the regional investment centres. That said, despite the difficulties that an entrepreneur may face in creating and carrying on a business, Morocco remains the most dynamic country in the region from an economic standpoint.
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