The Legal Structure of Moroccan Companies - Part 1/2

Choosing your company’s legal structure is the most crucial step before the realization of your project. This choice only comes up at the registration of your company at Morocco’s commercial register, which usually happens after verifying the feasibility of the project and finding funding for it.

A company’s legal form is a contract that establishes the future legal framework of the said company and binds it to its clauses. In addition to the “Corporate purpose” defining the activity of the company and its legal structure (SA, SARL, SNC, etc.), this contract also includes clauses that frame decision-making within the company and deals with the distribution of powers between the various shareholders.

The legal form determined upon creation will therefore have an impact on the entire lifespan of the company. To avoid an ill-considered choice, it is better to seek further advice from an expert in the field.

What are Morocco’s different legal forms?

There are many legal forms for business structures in Morocco which are oftentimes divided into two groups:

Capital companies (Société de capitaux) : These are companies that focus on the contributions of partners to the company’s share capital.
Partnerships (Société de personnes) : These companies are characterized by the predominant aspect of the personal factor “intuitu personae”.

The most common legal structures of companies in Morocco are S.A companies, S.A.R.L companies, and individual companies. Next is a brief introduction to each legal structure:

1- Individual company

This type of business is operated directly by a person in their own name.
It is mainly characterized by its simplicity of creation and operation, as well as by the freedom of action of the entrepreneur, whose liability is unlimited.
This type of business is not considered a corporation, the latter requiring more complex legal formalism.
The individual company also does not have any capital requirements.
These elements certainly give entrepreneurs great freedom, but they limit them in developing their activity because the size of their business and the lack of equity make it fragile and vulnerable.

2- The Public Limited Company (SA)

The Public Limited Company (SA) is a commercial company that requires at least 5 shareholders. The responsibility of a shareholder in the company is determined by the amount of their contribution. This responsibility also applies to debts.
The minimum capital of a public limited company is 300,000 DH.
The operation of this type of business is generally cumbersome and quite complex.

3- The Limited Liability Company (SARL)

A SARL is a commercial company that presents an intermediary model between partnerships and capital companies. It acquires legal personality by being registered in the commercial register. A SARL can be set up by a single partner or by several shareholders, provided that it does not exceed 50 people.
The amount of capital is freely set by the partners. The capital is not blocked as long as it does not exceed 100,000 DH. Beyond this amount, units representing cash contributions must be paid up for at least a quarter of their amount.
As with the public limited company (SA), the partners are liable for their contributions to the capital. The control of the company is carried out by an auditor if the turnover for a financial year exceeds 50,000,000 dirhams.

4- The Simplified Public Limited Company (SAS)

A SAS is made up of two or more companies in order to create or manage a joint subsidiary or to create a company that will become their joint parent company. This status is reserved for large companies, and shareholder companies must have a capital of 2,000,000 DH.

5- The General Partnership (SNC)

An SNC is a commercial company whose partners all have the status of traders and who have indefinite and joint responsibility for social debts. An SNC does not require a minimum capital, it is characterized by the simplicity of the formalities of its constitution.

6- The Simple Limited Partnership (SCS)

An SCS is a partnership made up of general partners and limited partners.
The general partners must all have the quality of trader, they participate in the management and the life of the company and are jointly liable for social debts.
The limited partners participate in the capital of the company without, however, investing in the life of the company, and their liability for social debts is only up to the extent of their contribution to the capital.

7- The Limited Partnership by Shares (SCA)

An SCA is a company whose capital is divided into shares. It is made up of general partners in the capacity of merchants and limited partners who are the shareholders.
The general partners contribute indefinitely and jointly to the company’s social debts, while the limited partners are only liable for their contribution to the capital.

8- The Joint Venture Company (SEP)

A Joint Venture is a company that only exists in the relationship between the partners. It is not subject to registration or any form of publication because it is not intended to be known to third parties.
A minimum of two people are needed to create a joint venture. Each partner must make a contribution (in cash, in-kind).
The corporate purpose of a SEP, as well as the rights and obligations of the partners who create it, is freely defined by them.

9- The Economic Interest Groupings (GIE)

An Economic Interest Grouping (GIE) is an intermediary form between an association and a company, but it can by no means be considered a company.
It is made up of two or more legal or natural persons who wish to manage an activity and generate profits for the members of this GIE.

To learn how you can better choose the legal form most appropriate to your company, read the second part of Starting your company in Morocco.

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The Legal Structure of Moroccan Companies – Part 1/2