Corporate law in Morocco aligned with international standards


The following laws form the basis of the Moroccan corporate legislative corpus: the Moroccan civil code, or Dahir (royal decree) des Obligations et des Contrats, of August 12, 1913; Law No. 17-95 on joint stock companies promulgated by Dahir No. 1-96-124 on August 30, 1996; and Law No. 5-96 on limited liability companies, promulgated by Dahir No. 1-97-49 on February 13, 1997.

Corporate Law

The business environment, both global and local, is changing and evolving very rapidly, thus requiring regular updates of the Moroccan business legal framework.

Since their adoption, Law No. 17-95 companies and Law No. 5-96 have been simplified, as a result of digitalisation, dematerialisation and an improving business environment.

In this context, Law No. 5-96 was recently amended in 2019 with the entry into force of Law No. 21-19 on April 29, 2019, which aims to strengthen the protection of minority shareholders, accentuate the principle of transparency and good governance and align with international standards.

The main amendments in the new Law No. 21-19 revolve around the following:

• The supervision of the dividend distribution procedure by the general meeting or, where applicable, by the manager, through the power to set the terms and conditions for the payment of dividends within a period not exceeding nine months after the end of the financial year. This period may be extended by court order at the manager’s request;

• Strengthening the rights of minority shareholders holding 5% of the share capital – previously 10% – who may now take part in the decision of the issues to be discussed on the agenda of the general meeting. Moreover, shareholders holding at least 10% of the shares and representing 10% of the shareholders may request the convening of a general meeting; and

• Accentuating the principle of good governance by submitting any disposal of more than 50% of the company’s assets during a period of 12 months to prior approval of the extraordinary general meeting and a vote of the shareholders holding at least three-quarters of the capital.

Notable Reform

The most recent and significant reform relating to Law No. 17-95 was introduced by Law No. 20-19, which was promulgated by Dahir No. 1-19-78 and entered into force on April 29, 2019.

Law No. 20-19 extended the liability of the directors and of the chief executive where applicable, as well as that of the members of supervisory boards, to cover misconduct committed under their management or acts not in the company’s interest committed in the exercise of the powers granted to them, with the possibility for the court to order them to return to the company the profits generated by such acts, and to prohibit them from managing, administering, representing or controlling any company for a period of 12 months.

The amendments brought by Law No. 20-19 also relate to publicly listed companies by introducing independent and non-executive directors who are neither chairmen, chief executives, deputy chief executive, nor employees of the company exercising management functions. Publicly listed companies must appoint at least one independent director and have a period of one year to comply, starting from the entry into force of the law.

In line with Law No. 21-19, Law No. 20-19 introduces, for the joint-stock companies, the prior approval of the extraordinary general meeting for any disposal of more than 50% of the company’s assets during a period of 12 months.

Furthermore, in terms of digitalisation and after the publication in the Official Gazette on August 23, 2018 of Law No. 87-17 promulgated by Dahir No. 1-18-79 dated August 6, 2018, amending Law No. 13-99 enacted by Dahir No. 1-00-71 of February 15, 2000, establishing the Moroccan Industrial and Commercial Property Office (Office Marocain de la Propriété Industrielle et Commerciale, OMPIC). The purpose of the OMPIC is to manage, for the benefit of the state, the electronic platform for the creation and support of companies by electronic means in order to maintain and operate the related database, as well as guarantee its secure use by all stakeholders. This main law completes the legal regime necessary for the online creation of companies, which was published in the Official Gazette on January 21, 2019.

Indeed, Law No. 88-17 on the creation of companies by electronic means and their support promulgated by Dahir No. 1-18-109 of January 9, 2019 introduces the use of an “electronic platform for the creation and support of companies by electronic means”. The website dedicated to the digitalisation of company creation processes will mandatorily host all the legal formalities required for the creation of companies, subsequent registrations relating to it with the trade register, as well as all the formalities for the publication of data and documents relating to it in accordance with the legislation in force.

The procedures for filing documents can be either carried out by the individual or entity concerned, or by a representative holding a special power of attorney, by a notary, a lawyer, or a sworn or chartered accountant.

However, the process of business creation will not be fully digitalised since a regulatory text will set out the reading of paper documents that must be accompanied by electronic filing. The collection of all taxes and fees will in turn be done electronically.

Capital Markets

The enactment of Law No. 19-14 relating to the Casablanca Stock Exchange (CSE), brokerage firms and financial investment advisers was promulgated by Dahir No. 1-16-151 of August 25, 2016, providing a new legal framework for the way the CSE is operated today.

In order to revitalise the stock market, the legal framework brought by Law No. 19-14 splits the stock exchange into two markets: the first being for companies with large market capitalisation, while the second, with less demanding access rules, is for smaller companies, which grants them access to important financing resources.

The first and main market consists of four subdivisions, two for the trading of equity securities, one for mutual funds and one for debt securities. The second market comprises at least two subdivisions for equity and bond transactions.

The new legal framework also enhanced prudential rules in addition to reinforcing the supervisory and control powers of the Moroccan Authority of Capital Markets (Autorité Marocaine du Marché des Capitaux, AMMC) on stock exchange companies and professionals, notably by organising and supervising all services and investment advice activities, which in practice was not the case under the previous 1993 law. As such, and depending on the nature of the activities carried out by the investment advisers, the latter will only be able to operate after obtaining approval from the AMMC.

The rollout of Law No. 19-14 continues with an upcoming draft circular relating to communication requirements for alternative market issuers. So far, several clarifications have been provided in terms of disclosure, both at the time of the completion of public offerings and in terms of periodic information. Meanwhile, another circular organising investment advisers’ activities was published in January 2019.

The draft circular will also operationalise Law No. 44-12 relating to public offerings and promulgated by Dahir No. 1-12-55 on December 28, 2012, which entered into force with the publishing of application decree No. 2-17-227 on November 16, 2017. Law No. 44-12 implemented an overhaul of the public offering system in Morocco by introducing a new financial transparency mechanism with more detailed reports and quarterly indicators, among other elements. This benefits investors by helping them to better assess the performance of issuers, thus generating greater confidence among investors and boosting local capital markets activity.

The legal framework currently being finalised by the AMMC will provide prospectus templates with information requirements adapted to the nature of the transaction. It will also provide for the possibility of drawing up a reference document (annual report) that can serve several purposes and reduce the processing time prior to the completion of a financial transaction, as well as the introduction of the website as the main information publication medium, allowing for quick and widespread dissemination of regulated information.

Investment Reform

To attract more domestic and international investment, a new legal investment corpus was promulgated with Law No. 60-16 of July 2016, replacing the previous investment charter that was adopted in 1995. The investment reform provided for a restructuring of investment promotion activities vested in the newly created Moroccan Investment and Export Development Agency.

Several of the incentives established in the original charter were extended to cover all companies that meet the required conditions to benefit from tax advantages, whether located in free zones or not. This allowed such firms to avail themselves of tax benefits, particularly those available to exporting industries, and of a five-year corporate tax exemption for new industrial companies. However, the Finance Law of 2020 repealed the five-year exemption for exporting companies that will carry out their first export operation starting January 1, 2020. Indeed, as of January 1, 2020 exporting companies will be subject to taxation at the reduced progressive rate of 20% applied to the portion whose net profit is higher than Dh1m ($104,000).

Regional Investment Centres

Similarly, a new tax regime has been introduced for companies with controlled foreign corporation (CFC) status by the Finance Law of 2020, through taxation at the rate of 15% on their total turnover (local and export) beyond the five-year exemption period. It should be underlined that this new provision concerns companies with CFC status as of January 1, 2020. Those holding CFC status before the aforementioned date will remain subject to the former provisions.

One of the main innovations of the investment reform that is already in force was the recognition of the indirect exporter status. This should help support subcontractors of local industries that benefit from tax exemptions and reduced tax rates on the same grounds as direct exporters.

Meanwhile, the year 2019 saw the promulgation of Law No. 47-18, which reformed the regional investment centres (centres régionaux d’investissement, CRIs) and established new regional investment commissions. The new framework announced by Law No. 47-18 is based on three strategic axes: a restructuring of the status, organisation and governance of the CRIs; the establishment of unified regional investment commissions; and the simplification of investment-related procedures at both the national and regional levels.

Law No. 47-18 provides for the establishment of CRIs, which are one-stop shops for investment at the regional level. As such, they will be fully responsible for the processing of investment files, from the submission of applications to incorporation, and even the granting of authorisations to be applied for and obtained with other administrations and public entities.

Law No. 47-18 also provides for the establishment of unified regional investment commissions that will replace all existing territorial investment commissions, thus implementing a single framework for the evaluation, assessment and processing of investment applications. These new commissions will rule and give opinions on applications for administrative acts and authorisations necessary for the realisation of investment projects, such as applications for the temporary occupation of plots of land that are part of the state’s public or private domain, and for the lease or sale of agricultural land, among other areas.

Foreign Exchange Regulation

Under Moroccan law, all cash transfers from Morocco to a foreign country must be authorised under the Moroccan Foreign Exchange (FX) Regulation. Since the 1980s, the FX Regulation has gone through a significant process of liberalisation. The current FX Regulation is set in a new foreign exchange instruction dated January 1, 2020.

However, and so as to not impede foreign investment in Morocco, FX Regulation grants foreign investors, subject to certain conditions, with complete freedom, without limitation as to amounts, to:

• Carry out their investments in foreign currencies in Morocco;

• Transfer abroad all revenues generated by these investments in the form of dividends; and

• Re-transfer abroad all proceeds deriving from the sale or liquidation of these investments (the Convertibility Regime). The investments covered by the FX Regulation are, inter alia:

• Incorporation of a company in Morocco;

• Purchase of, or subscription to, a Moroccan company’s shares;

• Granting of shareholders’ loans paid in cash or by supplier’s credit; and

• Acquisition of real estate and of the rights attached thereto. The new instruction’s structure has been considerably reduced for more efficiency and understanding by all local and foreign operators. The 2020 version brings new measures of liberalisation and flexibility in both current and capital transactions, reflecting the irreversible trends in foreign exchange regulations in terms of consolidation of the convertibility regime and simplification of the provisions.

In addition, among the most important changes brought by the 2020 instruction, it is worth mentioning the option for banks to finance all the operations of companies located in the industrial acceleration zones, the new name of free zones; for banks to emit cautions guaranteeing foreign loans by Moroccans residing abroad for the acquisition of real estate in Morocco in foreign currency; for importers of goods to settle an import operation in excess of 10% over the amount domiciled, provided that this excess is charged by the Customs services; for service importers to prepay foreign database subscriptions and licence fees up to 12 months; as well as for importers and exporters to pay by compensation for the detention of ships beyond the ship demurrage period, contribute to a greater liberalisation of the foreign exchange regime.

Employment Law

Law No. 65-99, promulgated by Dahir No. 1-03-194 of September 11, 2003, forms the Moroccan Labour Code.

In 2003 the Labour Code aligned the legal framework for local employment with most modern employment legislations and practices. It did this by raising the minimum age for employment to 15 years of age, promoting gender equality, focusing on employee health and safety at the workplace, as well as protecting workers who belong to trade unions, among other measures.

On another note, the status of foreign employees has seen a major change recently. In fact, any employer wishing to hire a foreign employee must first obtain an authorisation from the Ministry of Employment and Professional Integration (Ministère de l’Emploi et de l’Insertion Professionnelle, MEIP). This authorisation is granted as a visa stamped on the employment contract.

The date of the visa is the date at which the employment contract takes effect. However, any modification to said contract requires a new visa and the authorisation may be withdrawn at any time by the MEIP. A new visa may also be required every year in case of indefinite-term employment.

In terms of the foregoing, Moroccan courts used to consider the employment contracts entered into by foreign employees as fixed-term employment contracts given that they enter into force on the date of the visa’s issuance and end on the expiration date set by the MEIP. It is worth noting that this interpretation was contrary to the non-discrimination principle set forth in the Moroccan Labour Code, as well as the international treaties signed by Morocco, and was continuously protested against by many associations and NGOs which brought the matter to Parliament.

In 2018 the Moroccan Supreme Court – the highest court in the kingdom – changed its interpretation, authorising employment contracts entered into by foreign employees to be considered as indefinite-term employment contracts.

Renewable Energy

The regime established by Law No. 13-09 relating to renewable energy provides a legal framework for the development of renewable energy projects in Morocco. Renewable energy projects are defined as all sources of energy that are naturally renewable, particularly solar energy, wind energy, geothermal energy, wave and tidal energy, as well as energy generated through biomass, waste and biogas – excluding hydraulic energy with installed power above 30 MW.

Law No. 13-09 aims to promote energy production from renewable sources, to market and export either by public or private entities. Previously, the National Office for Electricity Water (Office National de l’Électricité et de l’Eau Potable, ONEE), the stateowned entity responsible for the provision of electricity as well as the operation of the transmission system, had a monopoly on the production of electricity. Law No. 13-09 allowed electricity to be produced and exported by private entities. However, the supply of electricity must still be undertaken through the national grid.

The law also established the principle that any renewable energy power producer, whether public or private, has the right to be connected to the medium-, high- and very-high-voltage national electricity grid. According to the provisions of the above-mentioned law, a preliminary statement regime is required for new or upgraded installations that:

• Produce renewable energy of less than 2 MW and more than 20 KW, and are owned by the same operator on one or various sites; or

• Produce 8 MW or more of thermal energy.

Efficiency Agency

Furthermore, renewable energy projects with a capacity of 2 MW or more can only be implemented if they are proposed by the Moroccan Agency for Energy Efficiency (Agence Marocaine pour l’Efficacité Energétique, AMEE). The applicant should initially obtain a temporary authorisation for the construction of the renewable facility and then a final authorisation for operation of the plant. If the facility is not used within one year from the date of the granting of the final authorisation, or if electricity production is suspended for more than two consecutive years, the final authorisation may be withdrawn. The applicants under the authorisation regime are also required to meet certain technical and financial criteria. However, no conditions would apply in the case of renewable energy provided by a unique promoter at less than 20 KW.

The supply of electricity must be undertaken through the national electricity network and interconnections. However, Law No. 13-09 allows the possibility for any developer to build a direct electric distribution line, if such line is operated separately from the transmission network, and where:

• The electricity produced is aimed to be exported; and

• The operator has entered into a formal agreement with ONEE. Under Law No. 13-09, the administrative authority responsible for the development of renewable energy is required to allocate areas designed for the construction of wind and solar facilities of high production capacity. The designated areas will be proposed by the AMEE.

Renewable Amendment

At the same time, Law No. 58-15 was promulgated in 2016 under Dahir No. 1-16-3 of January 12, 2016 to amend and supplement Law No. 13-09. The new amendment increased the installed capacity threshold for hydroelectric power projects from 12 to 30 MW. Law No. 58-15 also introduced the possibility of selling electricity surpluses from renewable sources as part of the facilities connected to the high-voltage and very-high-voltage grid as well as medium-voltage and low-voltage to ONEE and/or to a distribution network operator. Consequently, private investors in renewable power will be able to sell their surplus output to the grid, but no more than 20% of their annual production.

While the granting of the authorisation for any project of electrical production facilities from a hydraulic power source was only submitted to the technical advice of the national network system operator, under the new law it also must be approved by the relevant hydraulic basin.

Published in May 2019, the new bill No. 40-19 amends Law No. 13-09 to strengthen the attractiveness of the renewable energy sector. It takes into account the rise of intermittent renewable energies, which require the national network system operator to set up a backup system and sufficient reserves to guarantee a balance is struck between the production and consumption of renewable energies.

In addition, the bill intends to establish a financial security that would guarantee the implementation of renewable energy projects, as well as the prior authorisation of the administration, in the event of any change of control of the shareholding of the operator holding the authorisation to develop the project.

Moreover, distribution networks operators will have the option to acquire up to 40% of the total energy supplied to customers located in their areas of competence if produced from renewable energy projects.

Last but not least, in response to the operators’ request, the bill also extended the deadline for the construction of hydropower plants to five years in order to remedy the current situation, whereby derogations at the end of the regulatory period of three years are a systematic recourse.


Real estate investment trusts (REITs), also known as organisme de placement collectif en immobilier, are an innovative real estate investment vehicle, which thrived and benefitted from strong appetite for them in markets across the world.

REITs have proved their suitability for partnerships and individual investors, as well as the general public. This is partly due to the fact that they are usually subject to a strict legal regime and that they are operated by licensed management companies that are subject to close control and scrutiny by financial markets regulators.

The legal framework governing REITs was introduced in 2016 by virtue of Dahir No. 1-16-130 dated August 25, 2016, which instituted Law No. 70-14.

REITs can be unlisted or listed on the CSE market and should have as a main purpose the development and/or acquisition of real estate properties – including off-plan properties – in order to rent them. They can also carry out any kind of work on such properties – renovation, building work and rehabilitation – and can, as a secondary purpose, manage financial instruments.

REITs can be set up either in the form of a fonds de placement immobilier (real estate investment fund), an unincorporated fund which does not have a legal personality, or as a société de placement holding of a stake in the share capital of companies and shareholders’ loans.

A REIT may contain several sub-funds, which result in the issuance of specific securities representing the assets of the REIT that are attached thereto. In this case, the REIT’s management regulations should specify the characteristics of each sub-fund and the management rules applicable thereto. Furthermore, each sub-fund incurs only the debts and obligations related to such sub-fund and only benefits from the assets of the same.

The incorporation of a REIT or the creation of a sub-fund within a REIT shall be approved by the AMMC, which validates its draft management regulations. REITs are also subject to the law related to public offerings and remain under the control of the AMMC.

It should be noted that it is possible to create a REIT with light functioning rules. However, in this case, the subscription to or the acquisition of the shares of the REIT is only reserved for qualified investors such as banks, insurance companies, pension funds, investment funds, among others.

The tax regime related to REITs was first set by the Finance Law of 2017 and rests on the principle of tax transparency, according to which the revenues generated by REITs are not subject to tax.

REIT Amendment

Subsequently, the Finance Law of 2018 amended the provisions of Article 6-I-A-31 of the General Tax Code by granting a full and permanent exemption from corporate tax to the transactions carried out by REITs. In fact, the Finance Law of 2018 stated that dividends distributed by REITs shall be subject to the following tax regime:

• If the shareholders are individuals, the dividends are subject to a withholding income tax of 15%;

• If the shareholders are companies subject to corporate tax, the dividends will be incorporated to the taxable income of the company and subject to the common corporate tax rates of: 10% for an annual taxable income equal to or less than Dh300,000 ($31,200); 17,50% for an annual taxable income ranging Dh300,001-Dh1m ($31, 200-104,000); and 31% for an annual taxable income of more than Dh1m ($104,000). It is worth noting that the Finance Law of 2019 brought a major amendment to the tax regime applicable to REITs, as set forth in Article 6-I-C-1 of the General Tax Code, by granting companies a corporate tax reduction of 60% on the dividends distributed to them in their capacity as shareholders of REITs.

This major tax incentive, which has been in force since January 1, 2019, was eagerly awaited by the market and operators in the real estate business. It is aimed at dynamising the sector by mobilising domestic savings and enhancing the financing of real estate investment through REITs. According to the Ministry of Economy and Finance, REITs have the potential of raising approximately Dh200bn ($20.8bn) of investment over the medium term.

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The Report: Morocco 2020

Legal Framework chapter from The Report: Morocco 2020

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