Morocco is uniquely positioned as a regional centre for trade, manufacturing, warehousing, redistribution, sales and call centres, and has an array of IT services reaching the European Union (EU), West-, Central- and North Africa, the Middle East and Eastern Europe.
It is party to trade agreements which allow the country to trade tariff-free in major markets throughout these regions. With its special location, the strong endorsement of its financial sector by the World Bank, growing ties with the US, and increased use of English in business, Morocco is the best location for companies wanting to reach these markets without the hassle of learning new languages and business customs.
Morocco is a significant market opportunity for foreign companies and investors for many reasons. Morocco’s strategic trading location, large consumer class, potent economic growth, more than USD 100 billion annual gross domestic product (GDP) and successful implementation of financial restructuring programmes supported by the World Bank, the International Monetary Fund and the Paris Club, make this North African nation very attractive to investors.
Morocco is a fairly stable economy with continuous growth over the past half-a-century. Current GDP per capita grew 47% in the 1960’s reaching a peak growth of 274% in the 1970’s. However, this proved unsustainable and growth scaled back sharply to just 8.2% in the 1980’s, 8.9% in the 1990’s, and 6.2 % in the early years of 2000.
Government reforms and steady yearly growth in the region of 4–5% from 2000 to 2007, including 4.9% year-on-year growth in 2003–2007 helped the Moroccan economy to become much more robust compared to a few years ago. For 2015, the GDP growth is estimated at 4.6% thanks to a spike in agriculture output.
Economic growth is far more diversified, with new service and industrial poles, like Casablanca and Tangier, developing.
SETTING UP A BUSINESS
Foreign investors who intend to conduct commercial activities in Morocco can choose from a wide range of legal entities. The choice will vary depending on business priorities.
There are two possible ways for an individual to go into business:
– As a sole trader (Entreprise personnelle)
– As the sole partner of a single-shareholder limited liability company (Société à Responsabilité Limitée Associe Unique).
A sole trader is an individual who carries on a business on a regular basis.
The sole trader is wholly responsible for his/her business and his/her personal possessions may be used as a guarantee in case of financial difficulty.
SOLE-PARTNER PRIVATE LIMITED COMPANY
A private limited company with only one partner (Société Responsabilité Limitée Associe Unique)has the same legal requirements as a limited liability company (as described in the section on the next page).
The liability of the single partner is limited to the amount of their investment.
LIMITED COMPANIES – PUBLIC LIMITED COMPANY (SOCIÉTÉ ANONYME – SA)
The Moroccan legal form closest to a US corporation is the Société Anonyme(SA).
The incorporation of an SA requires a minimum of 5 shareholders and a minimum capital of 300,000 MAD (approximately USD 30,000) or MAD 3 million (approximately USD 300,000) if the shares are to be quoted on the stock exchange.
At least 100% of the share capital must be subscribed upon incorporation; only 25% of this must be paid upon the setting up. The remaining 75% must be paid within the following three years.
The liability of shareholders is limited to the amount of their investment. The shareholders meet at least once a year to approve the financial statements, to decide whether profits will be distributed or retained and also to appoint/dismiss directors or members of the supervisory board (Conseil de surveillance) and statutory auditors (Commissaires aux Comptes).
A simple majority rule applies in annual shareholders’ meetings. If major decisions have to be made, such as a merger or a change in the articles of association, a shareholders’ meeting must be held where qualified majority rule applies (two-thirds).
PRIVATE LIMITED COMPANY (SOCIETE A RESPONSABILITE LIMITEE– SARL)
A SARL may have no more than 50 shareholders.
Shareholders in a private limited company are liable for their capital contribution. No legal minimum amount is required. The amount of the capital is fixed by the shareholders.
A SARL is run by one or more managers (gérants), who may be appointed by the articles or by a 3/4 majority decision of shareholders. They may be chosen among the shareholders themselves or among third parties. The manager makes all management decisions on behalf of the company and he/she may be held personally liable under civil and criminal law.
GENERAL PARTNERSHIP (SOCIÉTÉ EN NOM COLLECTIF– SNC)
A general partnership is a commercial company in which all of the associates are considered as merchants and jointly and severally liable for the partnership’s liabilities.
Despite this significant liability drawback, SNCs are often chosen because of their flexibility (there is no minimum share capital, no board of directors, a minimum of two partners and the possibility of dividend rights existing regardless of voting rights and capital contributions).
The SNC is not directly subject to income tax. Profits are taxable as part of each member’s income in proportion to their interest in the partnership.
LIMITED PARTNERSHIP (SOCIÉTÉ EN COMMANDITE SIMPLE – SCS)
The SCS structure, rarely used in Morocco, includes:
One or more general partners (called commandités) who manage the company and are responsible for debts incurred by the company, or One or more limited partners (called commanditaires) whose liability is limited to their capital contribution. Limited liability partners are not allowed to participate in the management of the company. Their legal status is similar to that of a partner in a SARL.
There is no legal minimum capital.
LIMITED PARTNERSHIP BY SHARES (SOCIÉTÉ EN COMMANDITE PAR ACTIONS – SCA)
This type of partnership is similar to the previous one except that the shares are negotiable and the status of the limited liability partners (commanditaires) is similar to that of shareholders in an SA. Members of limited partnerships by shares cannot be less than three.
OTHER FORMS OF BUSINESS ORGANISATION
INTERCOMPANY PARTNERSHIP (GROUPEMENT D’INTÉRÊT ÉCONOMIQUE – GIE)
A GIE is not a company but an association of companies willing to develop some of their activities together (eg research, marketing, joint sales and exports) whilst retaining their individuality and independence in other areas. A GIE has a legal personality and may be created with or without capital. Its objectives may be civil or commercial. A GIE is flexible and members are free to define its internal regulations. A GIE is transparent for tax purposes. Its members are liable for its debts.
JOINT VENTURE (SOCIETE EN PARTICIPATION – SEP)
A joint venture is not ordinarily disclosed to third parties. The partners make all the management decisions. Partners are individually liable to third parties and share the operating results. A SEP is required to register each active partner with the Trade Register.
It can be a civil or a commercial entity.
The taxation of business profits follows the territoriality concept:
Corporations, whether or not their head office is in Morocco, are taxed on theirpr oducts, profits and revenues:
− This includes all assets they own or activities they perform (whether lucrative or occasional operations) in Morocco
− It also includes the right to tax given to Morocco under agreements for the avoidance of double taxation with respect to income taxes.