January 2025 – Located at the crossroads of Africa, Europe and the Mddle East, Morocco has established itself as one of the preferred destinations for foreign investment in Africa. Thanks to its political stability, modern infrastructure and legal arsenal, Morocco is positioned as a strategic hub for companies from all over the world looking to invest on the African continent.
Indeed, as a geographical crossroads, Morocco offers privileged access to fast-growing African markets. Investments made in Morocco can serve as a basis for expanding activities to other African countries.
The decision to set up in Morocco is therefore a real opportunity for various economic players, which is why it is necessary to take a look at the legal issues involved.
In this article, we take a look at the world of setting up a business in Morocco, with an overview of the various legal aspects that need to be taken into consideration before any investment.
As explained below, it is essential for all foreign investors to carry out a thorough legal analysis in order to optimise their preparations for setting up in Morocco. There are a number of key aspects that need to be taken into account.
- Choice of company form
Moroccan law offers a wide range of company forms comparable to those available under French law. These include the société anonyme (SA), the société par actions simplifiée (SAS), the société à responsabilité limitée (SARL), the société en nom collectif (SNC), the société en commandite simple (SCS) and the société en commandite par actions (SCA).
This similarity with French law facilitates the process of setting up a company, particularly for French investors wishing to set up in Morocco, by providing a familiar and transparent legal framework.
In practice, the two most commonly used options for setting up a company in Morocco are the SA and the SAS.
The S.A. has a codified form of governance, with the investor only having a choice between a single-tier structure (board of directors) or a two-tier structure (supervisory board – management board). A minimum share capital of MAD 300,000 is also required to incorporate an SA. However, it differs in that it is possible to make a public offering.
The SAS, on the other hand, is characterised by greater flexibility, whether in terms of its form of management (only the appointment of a chairman is mandatory), the rules in the articles of association governing the transfer of shares in the company or the determination of the amount of its share capital. However, it may not issue shares to the public. Also, unlike a public limited company (SA), it is not required to appoint an auditor (unless a regulatory threshold is reached, which has not yet been published).
The SAS is a particularly popular form of company in Morocco due to its flexibility and numerous advantages. Modeled on French law, the SAS offers great flexibility in the drafting of the articles of association, allowing shareholders to freely define the company’s operating rules and mode of governance. Because of its flexibility, the SAS is highly recommended for investors looking for a suitable and efficient solution for setting up in Morocco.
- Moroccan foreign exchange regulations
We will focus specifically on the so-called “convertibility” regime because of its essential nature in the context of investment projects in Morocco. As a local specificity, this component is very often ignored by foreign investors, who may subsequently encounter difficulties in transferring funds from the Moroccan subsidiary to the foreign parent company in the event of non-compliance with the applicable provisions in this area.
Pursuant to the provisions of Article 155 of the General Instruction on Foreign Exchange dated 2 January 2024 (hereinafter referred to as the “Instruction”), the establishment of a company constitutes a foreign investment.
As such, the Instruction introduced a convertibility regime applicable to such investments, which guarantees investors complete freedom (i.e.: without prior authorisation from the Office des Changes) to
- carry out investment operations in Morocco;
- transfer the profits generated by these investments; and
- repatriate the proceeds of the liquidation or sale of the investments.
To benefit from the convertibility regime, the investment must be financed in foreign currency and not in dirhams, otherwise none of the above operations can be carried out without the prior approval of the Office des Changes, which is very restrictive in practice.
Furthermore, although the Instruction no longer mentions the obligation to draw up an investment report, it is still recommended that a letter be sent to the Foreign Exchange Office, accompanied by the bank form “Form 2” issued by the bank receiving the foreign currency funds for the initial investment. This will enable the investor to record the terms and conditions of his investment and to establish a ‘foreign investor’ file with the Foreign Exchange Office.
The Instruction also regulates technical assistance provided by foreign group companies to subsidiaries established in Morocco. Article 56 of the Instruction lays down a principle known as “degressivity”, according to which the fees received in return for these services must be degressive in order to take account of the autonomy acquired by the subsidiary over the years.
In other words, the fees received by the parent company for the technical assistance provided to the Moroccan subsidiary should gradually decrease over the years until they disappear. In this respect, the technical assistance contract should expressly provide for this principle in order to protect against any risk of a possible adjustment in this respect in the event of an unannounced inspection by the Foreign Exchange Office.
- Cross-border flows
With regard to the tax regime applicable to cross-border flows between Morocco and other countries, it is necessary to verify the existence of bilateral tax treaties aimed at avoiding double taxation of income.
Morocco has signed tax treaties with a large number of countries that host major investors, including Germany, the United Arab Emirates, the United States, France and Italy. The aim of these bilateral treaties is to avoid double taxation in the two countries concerned.
In practice, however, the Moroccan tax authorities tend to apply a withholding tax to certain income earned by Moroccan subsidiaries (e.g. technical services) by applying the General Tax Code to the letter, in defiance of bilateral tax treaties that exclude such taxation.
- Some investment incentives
Morocco has created several sectoral sovereign funds that can provide significant support for investment. These include the Industrial Development and Investment Fund, the Agricultural Development Fund and the Hassan II Fund for Economic and Social Development.
Investors can also benefit from an investment agreement as provided for in the Investment Charter. This agreement must be signed with the Moroccan government and approved by the Investment Commission. The project in question must meet criteria relating to, among other things, the amount of the investment, the creation of jobs, the location of the project and the transfer of technology involved. This agreement may allow, among other things, the granting of financial benefits related to the completion of the investment and vocational training.
Similarly, the status of “Casablanca Finance City” is open in particular to financial companies and related activities located in the “Casablanca Finance City” zone. The acquisition of this status, which is subject to the fulfilment of eligibility criteria to be analysed on a case-by-case basis, allows the subsidiary to benefit from tax and social security exemptions.
There are also Export Processing Zones, known as Industrial Acceleration Zones (ZAI), which are specific areas of the customs territory where all industrial or commercial export activities, as well as related service activities, are permitted under exemption from customs, foreign trade and exchange control regulations. Each zone is created and delimited by a decree that defines the type and activities of the companies that may be established there. Provided they meet the eligibility criteria, companies established in these ZAIs can benefit from preferential treatment, particularly in terms of foreign trade and exchange controls and tax regimes.
Finally, there is the Offshoring Scheme, which is open to companies operating in certain sectors, with significant export sales and a certain number of employees. A distinction is made between companies located in Integrated Industrial Platforms (IIPs) and those outside these zones. If the required criteria are met, eligible companies are entitled to tax benefits and professional training.
To sum up, Moroccan law, thanks in particular to its policy of openness to investment, is conducive to the establishment of foreign economic operators, thanks to the many favourable arrangements put in place for this purpose.
We invite you to consult UGGC Africa for all your projects of establishment in Morocco.
Writted by Rim Tazi, of counsel with collaboration of Ali Bougrine, managing partner at UGGC Africa.
