The following laws form the basis of the Moroccan corporate legislative corpus: the Moroccan Civil Code, or Dahir (royal decree) Obligations et des Contrats, of August 12, 1913; Law No. 17-95 on joint-stock companies, promulgated by Dahir No. 1-96-124 of 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 rapidly, thus requiring regular updates of the Moroccan business legal framework.

Since their adoption, therefore, Law No. 17-95 on joint-stock companies and Law No. 5-96 on limited liability companies have been simplified, particularly as the business environment has evolved with trends in digitalisation and dematerialisation.

In this context, Law No. 5-96 was amended in 2011 by Law No. 24-10, promulgated by Dahir No. 1-11-39, to facilitate and simplify the incorporation of limited liability companies (the most common corporate vehicles in Morocco), notably by removing the minimum share capital requirement and further easing formalities by making a bank certificate assessing the share capital available necessary only for share capital exceeding Dh100,000 (€8990).

The most recent and significant reform relating to Law No. 17-95 was introduced by Law No. 78-12, promulgated by Dahir No. 1-15-106 on July 29, 2015. The main amendments in this new Law No 78-12 revolve around the following:

• Easing the procedures relating to joint-stock companies. This includes simplifying the procedure for withdrawing funds from subscriptions in cash by allowing the representative of the board of directors or the executive board (Directoire) to withdraw funds by submitting a certificate proving that the company has been registered with the trade register. In addition, the dematerialisation of procedures can be achieved by filing financial statements and statutory auditor’s reports online.

• Improving management. This includes by appointing a vice-chairman of the supervisory board (this is optional); conferring to the executive board, which ensures the day-to-day operations of the company, the right to convene the general meeting, thereby strengthening its powers; setting up an audit committee, under the supervision of the board, to monitor issues related to the development and control of accounting and financial information.

• Reforming regimes for related-party agreements. Because they are entered into between the company and its managers or some of its shareholders, related-party agreements are subject to a specific authorisation regime. As such, Law No. 78-12 introduced a mandatory disclosure of related-party agreements, even when they only represent current transactions entered into under normal market conditions. In addition to informing the chairman of the board by the related party, this new system provides for the list of these agreements to be communicated to the other members of the board, as well as to the statutory auditors and shareholders who may consult these agreements at the relevant trade register.

• Preventing procedural deadlocks, thereby allowing for the possibility of the quick replacement of a statutory auditor (in the event of resignation) as appointed through an order from the president of the Commercial Court.

• Improving transparency and the information available to shareholders. In the event of mergers or spin-off transactions involving publicly listed companies, shareholders of publicly listed companies are mandatorily informed by a prospectus approved by the Moroccan Capital Markets Authority (Autorité Marocaine du Marché des Capitaux, AMMC) as fully and clearly as possible about the reasons, terms and consequences of such transactions so that they can fully understand their scope, assess their fairness and make an informed decision at the extraordinary general meetings convened to approve such transactions.

All publicly listed companies must publish the main corporate documentation with respect to their shareholders’ mandatory information obligations, with the provision that all necessary and relevant information regarding the ordinary general meeting be provided three weeks before said meeting. In terms of digitalisation, this was supported by the publication in the Official Gazette on August 23, 2018 of Law No. 87-17, promulgated by Dahir No. 1-18-79 of August 6, 2018, amending Law No. 13-99 enacted by Dahir No. 1-00-71 of February 15, 2000, which established the Moroccan Industrial and Commercial Property Office and delegated to it, for the benefit of the state, the management of the electronic platform for the creation and support of companies by electronic means, the maintenance and operation of the related database, and the guarantee of its secure use by all stakeholders.

The law that completes the legal regime necessary for the online creation of companies was published in the Official Gazette on January 21, 2019. Law No. 88-17 on the creation of companies by electronic means was promulgated by Dahir No. 1-18-109 of January 9, 2019 and introduces the use of an “electronic platform for the creation and support of companies by electronic means”.

The website dedicated to the dematerialisation of company creation 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 are carried out by the individual/entity concerned or by his representative holding a special power of attorney, such as a notary, lawyer or chartered accountant.

Business creation will not be totally paper-free since regulatory texts will be set out on paper and must be accompanied by electronic filing. The collection of all taxes and fees will 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 and provided the legal framework for the way the CSE is operated today.

In order to revitalise the stock market, the legal framework instituted by Law No. 19-14 splits the stock exchange into two: the first being for companies with large market capitalisation, and the second, which has less demanding access rules, for small companies, giving 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 two subdivisions for equity and bond transactions.

The new legal framework also enhanced the prudential rules and the AMMC’s supervisory and control powers over stock exchange companies as well as professionals, notably by organising and supervising all services and investment-related advisory activities, which was practically not the case under the previous 1993 law. As such, and depending on the nature of the activities carried out by the investment advisers, they will only be able to operate after obtaining the AMMC’s approval.

The rollout of Law No. 19-14 will continue with an upcoming draft circular related to communication requirements for alternative market issuers.

Thus, several opportunities for disclosure have been provided for, including when public offerings are being completed and through periodic information. Another circular setting out investment advisers’ activities was published in January 2019.

The draft circular mentioned above will also operationalise Law No. 44-12 relating to public offerings, promulgated by Dahir No.1-12-55 of December 2, 2012, which entered into force with the publishing of its 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, etc. This was for investors to better assess the performance of issuers, thus generating greater confidence among investors and increasing local capital market activity.

The legal framework currently being finalised by the AMMC will provide for prospectus templates with information requirements adapted to the nature of the transaction, as well as 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, and 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 in the wake of Law No. 60-16 of July 2016, replacing the previous investment charter adopted in 1995. The investment reform provided for a restructuring of promotion activities vested in the newly created Moroccan Investment and Export Development Agency (Agence Marocaine de Développement des Investissements et des Exportations, AMDIE).

Some incentives provided for in the original charter were extended to cover all companies that meet the required conditions, whether they are located in free zones or not. This allows such firms to avail themselves of tax benefits, particularly those available to exporting industries, and a five-year corporate tax exemption for new industrial companies. One of the main innovations of the investment reform was the recognition of “indirect exporter” status. This should help support subcontractors of local industries, which will benefit from the new status.

The new investment charter, which is at a very advanced stage of preparation, will define the overall framework for investment support with clear offers (common, sector-based and territorial) and precise advantages (taxation, land and support from the state, etc). According to the declarations made by the Ministry of Industry, Investment, Trade and Digital Economy, the upcoming investment charter will also introduce new legal provisions related to innovation, promotion of entrepreneurship and scientific research.

Competition Law

Free and fair competition in the context of business is a constitutional right under Moroccan law. Law No. 104-12 relating to freedom of prices and competition, promulgated by Dahir No. 1-14-116 of June 30, 2014; its application Decree No. 2-14-652; and Law No. 20-13 relating to the Competition Council, promulgated by Dahir No. 1-14-117 of June 30, 2014, are fully in force since the publication of the list of the new members of the Competition Council in the Official Gazette on December 13, 2018, putting an end to the confusion regarding the applicability of the provisions of the new competition legal framework , particularly with regards to merger control.

The new legal framework for competition has strengthened the role of the Competition Council by making it a decisional administrative authority and by giving it the power of sanction, notably with regards to anti-competitive practices and merger control.

The Competition Council ensures the compliance of economic operators with the principle of freedom of competition by monitoring anti-competitive practices and market concentration.

As such, the new legal framework prohibits, when distorting or restricting competition, express or implied concerted actions, agreements, understandings or coalitions, especially when they:

• Tend to limit access to the market or the free exercise of competition by other companies;

• Hinder price setting by the free play of the market by artificially favouring their rise or fall;

• Limit or control production, markets, investments or technical progress; or

• Allocate markets, sources of supply or public markets. In addition to cartels, the new legal framework also prohibits, when distorting or restricting competition, the abusive exploitation by a company or group of companies of:

• A dominant position in the internal market or a substantial part of it; or

• A situation of economic dependence in which a customer or supplier has no equivalent alternative. According to the new legal framework, the abuse may also involve refusal of sale or discriminatory conditions of sale, as well as the termination of established commercial relations, on the sole ground that the commercial partner refuses to agree upon unjustified commercial conditions, etc.

Price dumping practices – which are no longer conditioned by a criterion of dominant position or by a situation of economic dependence, as was the case before the 2014 reform when applied to consumers – are strictly forbidden, where such practices lead to the ultimate elimination of an operator (or one of its products) from a market or to the prevention of its access to such a market.

Under the new legal framework, the Competition Council may send sworn investigators to the premises of companies with the mission to capture and collect all the elements that make it possible to prove anti-competitive practices.

A company in breach of rules prohibiting cartels, or one that abusively exploits a dominant position, a situation of economic dependence or price dumping practices may face a fine of up to 10% of its turnover. It can also face claims for damages from companies it has harmed.

Exemptions to anti-competitive practices are also provided for in the new legal framework, such as when the concerned practices are justified by a contribution to economic and/or a technical progress, including through the creation or maintenance of jobs, or to improve the management of small and medium-sized enterprises after pre-approval from the Competition Council.

Merger control: Regarding merger control, the new legal framework transferred the competence and decisional powers from the Office of the Head of Government to the Competition Council. Moreover, new non-cumulative thresholds – with respect to merger or acquisition transactions triggering a notice to be sent to the Competition Council – were added to the “existing” criterion of a local market share equal to or exceeding 40% owned by the concerned parties to such transactions. These thresholds are considered reached when:

• The aggregate worldwide pre-tax turnover of all of the parties concerned (undertakings or group of natural or legal persons) exceeds Dh750m (€67.5m); or

• The pre-tax turnover earned in Morocco by at least two of the parties concerned (undertakings by groups of natural or legal persons) exceeds Dh250m (€22.5m). As the first threshold added by the new legal framework may be confusing, it should be recalled that only foreign-to-foreign transactions are subject to Moroccan merger control rules when consistent with Article 1 of Law No. 104-12. i.e., when such transactions may have an effect on competition in the Moroccan market or a substantial part of it. Joint ventures are also subject to the aforementioned merger control legal framework.

If a relevant transaction has been carried out without it being notified, the Competition Council directs the parties – subject to a progressive coercive fine limited to 5% of their average pre-tax daily turnover – to notify the relevant transaction or return to the state prior to the completion of such a transaction.

Furthermore, the Competition Council may impose on the persons responsible for the notification a financial penalty that shall not exceed – in the case of legal entities – 5% of their pre-tax turnover made in Morocco during the most recently closed financial year, as well as, if applicable, the turnover that the acquired party made in Morocco during the same period – and, in the case of individuals, up to Dh5m (€450,000).

Foreign Exchange Regulation

All cash transfers from Morocco to a foreign country must be authorised under the Foreign Exchange (FX) Regulation. Since the 1980s the FX Regulation has been liberalised considerably. The current FX Regulation is set out in a new instruction dated January 1, 2019, which entered into force on January 14, 2019.

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

• Carry out their investments in foreign currencies in Morocco;

• Transfer abroad all revenue generated from these investments in the form of dividends; and

• Retransfer 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 greater efficiency and understanding by all local and foreign operators.

These efforts are also reflected in the content of the new instruction as, for example, the formalities related to the repatriation of shares’ sale proceeds have been lightened; companies can use PORTNET (an information system aimed at facilitating foreign trade procedures) for the domiciliation and clearance of import documents; banks are exempt from the obligation to communicate the domiciliation register and uncleared files; and the domiciliation formality for the import of services has been removed.

Among the most important changes brought about by the 2019 instruction is the option for international trading operators registered with the Foreign Exchange Office to pay the purchase price of goods before the repatriation of the proceeds of resale, the possibility for local subsidiaries to transfer remuneration due to their parent companies for the provision of foreign staff, and the possibility of local banks granting loans using currencies held in foreign currency accounts to finance import, export, international trade and investment transactions, or to finance the operating cycle of industrial companies located in free zones in Morocco.

The foreign investment regime has also been extended to collective investment companies, allowing them – along with the Undertakings for the Collective Investment in Transferable Securities – to invest abroad up to 100% of subscriptions collected in foreign currencies.

In addition, start-ups have been authorised to pay for the importation of services related to their activities using international payment cards (under “e-commerce”) up to Dh500,000 (€45,000) in value per calendar year. All the aforementioned measures have been implemented in the pursuit of 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 brought the legal framework for local employment into line with most modern employment legislations. It did this by, for example, raising the minimum age for employment to 15 years, promoting gender equality, focusing on employee health and safety, and protecting workers who belong to trade unions.

On another note, the status of foreign employees has seen a major change very recently. In fact, any employer wishing to hire a foreign employee must obtain authorisation from the Ministry of Employment and Professional Integration (MEPI). This authorisation is granted as a visa stamped on the employment contract. The date of the visa is the date from which the contract takes effect, and any modification to said contract requires a new visa. The authorisation may be withdrawn at any time by the MEPI. A new visa may be required every year in the case of indefinite-term employment contracts.

In terms of the foregoing, Moroccan courts used to consider the employment contracts entered into by foreign employees as fixed-term contracts, given that they enter into force on the date of the visa’s issuance or an expiration date set by the MEPI. 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 NGO’s, which brought the matter to the Parliament. In 2018 the Moroccan Supreme Court – the highest court in Morocco – changed its interpretation, authorising that employment contracts entered into by foreign employees be considered indefinite-term employment contracts.

Islamic Finance

The domestic Islamic finance environment (known as participatory finance in Morocco) has evolved significantly over the years.

After a timid launch in 2007 by the central bank, Bank Al Maghrib (BAM), of three alternative finance instruments that comply with the sharia precepts – ijara (leasing), murabaha (cost-plus financing) and musharaka (joint venture) – a comprehensive legal framework was adopted in 2017.

This comprised Law No 103-12 relating to credit institutions and assimilated organisations, promulgated by Dahir No. 1-14-193 of December 24, 2014. This has been amended to include a chapter on participatory banks, as well as decrees 17-339, 17-340 and 17-341 of February 17, 2017 from the minister of economy and finance approving circulars from BAM.

The aforementioned legal framework outlines the participatory finance instruments that participatory banks are authorised to market. These are ijara, murabaha, musharaka, mudaraba (profit sharing), al salam (short-term bonds) and istisna’a (deferred delivery). Participatory banks may also market any product which does not give rise to bank interest – which is prohibited under Islamic law – and whose technical characteristics are determined and approved by a BAM circular.

Since the legal framework was implemented, participatory finance has seen rapid growth in Morocco. In fact, in 2017 BAM issued licences authorising the creation of five participatory banks and three Islamic windows. In turn, this has led the industry to become more dynamic, as well as the financial inclusion of numerous citizens. According to the governor of the central bank, there are more than 70 banks and financial institutions providing sharia-compliant financial services, which have so far granted Dh1.1bn (€99m) in credit. Furthermore, 2018 saw the first sukuk (Islamic bond) issuance, which totalled Dh1bn (€89.9m) and and was oversubscribed 3.6 times. As part of moves to develop the participatory finance sector, Morocco is also preparing for the introduction of takaful (Islamic insurance), which will probably be implemented in 2019. In fact, Law No. 87-18 on takaful – which amends and completes Law No. 17-99 related to the Insurance Code – was adopted by the government on October 18, 2018 and should be submitted to the Parliament for approval in due course. According to some analysts, participatory banking, which already has global assets of approximately $20bn, is expected to add up to 10% of additional assets to Morocco’s banking system as it would attract a portion of the currently unbanked Moroccans. It is also likely to attract foreign direct investment from sharia-compliant investment funds and financial institutions. This would have a positive impact on the development of the local participatory finance industry and more generally on growth.