In brief: The public limited company (SA) in Morocco requires a minimum of 5 shareholders, MAD 300,000 in share capital (MAD 3,000,000 for public offerings), and is governed by Law 17-95. It can be structured as a single-tier (board of directors) or two-tier (executive board + supervisory board) company.
The public limited company (PLC) in Morocco is a corporate form used by companies listed on the stock exchange. It also covers entities carrying out large-scale projects. By virtue of its structure, it provides greater security and control over investments.
Governed by Law 17-95 on public limited companies, the PLC is one of the most widely used legal forms in Morocco after the LLC. It is a capital company suited to major projects and subject to stringent regulations. For certain economic activities, the law mandates the PLC form, such as: banking activities, real estate credit companies, and investment firms.
Characteristics of the Public Limited Company in Morocco
The PLC in Morocco, regardless of its purpose, remains a commercial entity. Its characteristics include:
Types
There are 2 main types of public limited companies: the single-tier (monistic) or so-called classic PLC with a single supervisory body, namely the board of directors, and the two-tier (dualistic) PLC with an executive board and a supervisory board. There are also other forms of PLCs such as open and closed PLCs, PLCs that make public offerings and PLCs that do not make public offerings, and finally listed and unlisted PLCs.
Shareholders
In PLCs, we refer to shareholders, and there must be a minimum of five (5) to form the company.
Both natural and legal persons may participate in the share capital of a PLC. There are no residency or nationality requirements.
However,
- in the single-tier PLC, at least one shareholder must be a natural person, since the chairman of the board of directors must be a natural person and a shareholder, and
- regarding the two-tier PLC, at least two shareholders must be natural persons, since the chairman and vice-chairman of the board must be natural persons and shareholders.
Commercial Capacity and Liability
In the PLC in Morocco, commercial capacity is required only for the executives and founders of the company.
As for liability, like in an LLC, it is limited to the amount of the shareholders’ contributions.
Share Capital and Contributions
The share capital of the PLC in Morocco is set at three million (3,000,000) dirhams for companies making public offerings and three hundred thousand (300,000) for those that do not, and it is divided into shares.
Regarding contributions, cash contributions must be fully subscribed and at least one quarter must be paid up at the time of incorporation, with the remainder due within three years of registration; contributions in kind must be fully subscribed and fully paid up, and must be valued by a contribution auditor; and finally, contributions in services (industry) are not permitted.
Statutory Auditor
At least one statutory auditor must be appointed in each PLC in Morocco.
However, companies making public offerings are required to appoint at least two statutory auditors.
This role is generally held by chartered accountants, which is justified by the fact that chartered accountants, by their training and experience, are best prepared for this function.
Securities and Corporate Purpose
The securities of the PLC in Morocco are negotiable or freely transferable securities and, as such, may be listed on the stock exchange.
The securities issued by PLCs include: shares, investment certificates, and bonds. Subscription and allocation rights are treated similarly.
The nominal value of a share may not be less than fifty (50) dirhams. However, for companies whose securities are listed on the stock exchange, the minimum nominal value is set at ten (10) dirhams.
As for the corporate purpose of the PLC, there are no restrictions.
Company Name and Registered Office
The company name is freely chosen by the company; it may be derived from the nature of the activity, or simply be a fanciful or imaginative name.
The registered office designates the company’s domicile, which is why it must be specified in the articles of association.
How the PLC Operates in Morocco
To establish a PLC, it is essential to understand the specificities of this legal form, which is distinguished by its operating and governance rules.
Incorporation of the Public Limited Company (PLC)
To create a PLC in Morocco, you must:
- Have a registered office and a company name
- Obtain a Negative Certificate
- Draft the articles of association (either by a chartered accountant or a law firm)
- Draft the other documents (subscription and payment slips, minutes of the first board of directors meeting, etc.)
- Transfer the share capital to a bank account
- Register the company with the tax authorities and other administrations
Additional Formalities
- Preparation of subscription slips
- Preparation of subscription/payment declarations
- Filing of incorporation documents and registration formalities with the regional tax directorate
- Registration with the commercial register
- Affiliation with the CNSS (National Social Security Fund)
- Official publication in an official bulletin
Executives of the PLC
The executives of the PLC vary depending on its form:
In the single-tier PLC: it is the board of directors that manages the company. It consists of:
- A minimum of three and a maximum of twelve members. The law increases this number to 15 members when the company makes public offerings;
- Moreover, in the case of a merger, the number of members may exceed the limit up to the total number of directors who have been in office for more than six months in the merged companies.
In the two-tier PLC: there are directors (or members of the executive board) and the supervisory board, which are composed of:
Composition of the Executive Board:
- The number of members must not exceed five. Furthermore, the law increases this number to seven when the company makes public offerings.
- The executive board exercises the functions conferred upon it by law under the supervision of a supervisory board. Its members are appointed by the supervisory board.
- It should be noted that shareholders determine the term of office of the executive board in the articles of association. This term must be limited to a period of between two and six years.
Composition of the Supervisory Board:
- A minimum of three and a maximum of twelve members
- Fifteen members for companies making public offerings
- In case of a merger, the limit of twelve or fifteen may be exceeded. The limit then corresponds to the total number of directors who have been in office for more than six months in the companies involved in the merger.
- The law prohibits a member of the supervisory board from being part of the executive board.
- The members of the supervisory board are appointed in the articles of association at incorporation. During the company’s life, they are appointed by the ordinary general assembly.
- Furthermore, the term of office of supervisory board members may not exceed six years.
Powers of the Executives
The management bodies of a PLC are:
- First, the Board of Directors,
- Second, in the two-tier form, the Executive Board coupled with a Supervisory Board
- Finally, the ultimate power lies with the shareholders’ assembly
In dealings with third parties, there are two forms of management:
- First, the single-tier form where the law grants power to the board of directors;
- Moreover, in the two-tier form, the law assigns powers to the executive board. A supervisory board oversees its actions.
These two bodies have the broadest powers to act in all circumstances on behalf of the company.
General Assemblies
In addition to the ordinary, extraordinary, and mixed general assemblies found in LLCs, the PLC has so-called “special” assemblies, which bring together holders of particular securities other than shares (such as the bondholders’ assembly).
OGA (Ordinary General Assembly): This is the assembly that allows all decisions to be taken, except those involving changes to the articles of association.
The law requires the following quorums for this meeting:
- First, for the first call, one or more shareholders present or represented must hold at least one quarter of the shares with voting rights
- Then, at the second call, the law requires no quorum.
EGA (Extraordinary General Assembly): this is the only assembly that may take decisions involving amendments to the articles of association.
Such amendments include:
- Change of registered office
- Change of management (when a manager is named in the articles of association)
- Change of share capital
- Redistribution of shares
- Change of corporate purpose, etc.
The law requires a quorum for this assembly as follows:
- For the first call, one or more shareholders present or represented must hold at least half of the shares with voting rights;
- For the second call, one quarter of the shares with voting rights.
Dissolution of the PLC
In general, a PLC must be dissolved when:
- The number of shareholders falls below 5 for more than one year;
- The share capital falls below the legal minimum;
- The shareholders’ equity falls below one quarter of the share capital. In this case, the shareholders must decide, within two years, whether to restore equity or proceed with early dissolution.
Its dissolution may also result from other factors such as:
- Upon expiry of the term set by the shareholders (in the absence of renewal);
- By decision of the shareholders;
- The disappearance or extinction of its corporate purpose;
- Annulment of the company when it no longer meets the conditions of incorporation;
- Following a court-ordered dissolution;
- Application of collective proceedings
Tax and Social Security Regime of the PLC in Morocco
The tax regime of the PLC in Morocco is similar to that of the LLC. The applicable taxes are:
- Corporate Tax
- Value Added Tax (VAT)
- Local taxes such as professional taxes and communal services taxes.
As for the social security regime, executives benefit from the employee social security and pension scheme.
In conclusion:
The public limited company is a commercial company by virtue of its form, regardless of its purpose. It is suited to large projects because it provides solid guarantees to present to investors and bankers, which is one of its main advantages.
Furthermore, it has a heavy and structured operation, even complex. This provides additional security. However, it is less flexible than the LLC. It has a governance model that comes in two formats:
- Board of Directors and a Chief Executive Officer
- Executive Board and a Supervisory Board.
Blog article written by: Jovannie Pascale AGAYA
Frequently Asked Questions
What is the minimum share capital required for a PLC in Morocco?
The minimum share capital is 300,000 dirhams for companies that do not make public offerings and 3,000,000 dirhams for those that do. Cash contributions must be fully subscribed with at least one quarter paid up at incorporation, and the remainder due within three years.
How many shareholders are required to form a PLC in Morocco?
A minimum of five shareholders is required to form a public limited company in Morocco. Both natural and legal persons may participate, with no residency or nationality requirements. However, at least one shareholder must be a natural person for single-tier PLCs, and at least two for two-tier PLCs.
What is the difference between a single-tier and two-tier PLC?
A single-tier (monistic) PLC has a board of directors as its sole supervisory body, while a two-tier (dualistic) PLC has both an executive board and a supervisory board. Members of the supervisory board cannot serve on the executive board, and each structure has different rules for composition and appointment.
When must a PLC be dissolved in Morocco?
A PLC must be dissolved when the number of shareholders falls below five for more than one year, the share capital drops below the legal minimum, or shareholders’ equity falls below one quarter of the share capital (with a two-year period to restore equity or proceed with dissolution).
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