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. Regulated activities are subject to specific legal-form requirements. Credit institutions headquartered in Morocco take the form of a fixed-capital SA or a variable-capital cooperative, unless a special statutory regime applies.
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. Law 17-95 imposes no general residency or nationality condition on shareholders. Sector-specific and investment rules must also be respected.
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
- The supervisory board chairman is a natural person; appointing a vice-chairman is optional. If appointed, the vice-chairman must also be a natural person. Board members hold the shares required by the articles of association.
Commercial Capacity and Liability
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 has a minimum of 3,000,000 dirhams for public offerings and 300,000 dirhams otherwise, subject to requirements for regulated activities. 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; shares issued for contributions in kind are fully paid up on issue. Contributions are described and valued in the articles on the basis of a contribution auditor’s report, subject to the exception for State companies, public subsidiaries and mixed companies covered by Law 69-00; 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.
Only persons registered with the Order of Chartered Accountants may act as statutory auditors of an SA.
Securities and Corporate Purpose
Shares of an SA are negotiable, but transfers may be subject to legal or statutory restrictions. Listing requires compliance with the conditions of the relevant market. Article 6-III of the CGI provides eligible companies with a corporate tax reduction for the three consecutive years following the listing year: 25% for a public sale of existing shares, or 50% for a capital increase of at least 20%, with waiver of preferential subscription rights and public distribution upon listing. Credit institutions, insurers and reinsurers, public-service concessionaires and certain companies with public shareholdings are excluded. A listing certificate is required; delisting before ten years may result in clawback.
The securities issued by PLCs include: shares, investment certificates, and bonds. Subscription and allocation rights are treated similarly. During a capital increase in cash, existing shareholders also benefit from a preferential subscription right (PSR) proportional to their shareholding.
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.
The corporate purpose must be lawful. Certain activities require approval or specific conditions, notably banking.
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)
- Publish an incorporation notice in the Official Bulletin and a legal announcements newspaper within thirty days of registration with the commercial register.
Executives of the PLC
The executives of the PLC vary depending on its form:
In the single-tier SA, the board determines strategic directions and oversees implementation; executive management is exercised by its chairman or a separate chief executive officer. The board consists of:
- A minimum of three and a maximum of twelve members. The maximum increases to fifteen when the company’s shares are listed on the stock exchange;
- In a merger, directors who have held office for more than six months in the merging companies may join the board, up to twenty-four members, twenty-seven if one company is listed, or thirty if both are listed.
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. The articles may increase this number to seven when the company’s shares are listed.
- 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
- A maximum of fifteen members when the company’s shares are listed
- In a merger, supervisory board members who have held office for more than six months in the merging companies may join, up to twenty-four members, twenty-seven if one company is listed, or thirty if both are listed.
- 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.
- Supervisory board terms may not exceed six years for appointments by the general meeting, or three years for appointments in the articles of association.
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:
- In the single-tier form, the chief executive officer represents the company towards third parties;
- In the two-tier form, the law assigns powers to the executive board. A supervisory board oversees its actions.
In a single-tier SA, the board determines strategy and oversees implementation; the chief executive officer represents the company towards third parties. In a two-tier SA, the executive board manages and represents the company under supervisory board oversight. Each body respects the powers reserved by law to the other bodies.
General Assemblies
In addition to the ordinary, extraordinary, and mixed general assemblies found in LLCs, special meetings bring together holders of a particular class of shares to approve changes to their rights. Bondholders have their own organization and meetings.
OGA (Ordinary General Assembly): This is the assembly that allows all decisions to be taken, except those involving changes to the articles of association. It must in particular be held each year to approve the accounts: see how the annual ordinary general meeting unfolds.
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.
The extraordinary general meeting amends the articles, subject to specific statutory powers. The board of directors or supervisory board may transfer the registered office within the same prefecture or province, subject to ratification by the next extraordinary meeting. An SA has no LLC-style manager; appointments follow the rules for each body.
Such amendments include:
- Change of registered office
- Change of share capital
- 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
The following situations may lead to dissolution under the legal conditions:
- If shareholder numbers remain below five for more than one year, any interested party may seek judicial dissolution. The court may allow up to one year to regularize; it does not dissolve the company if regularization occurs before the first-instance decision on the merits.
- A reduction below minimum capital must be followed within one year by a restoring capital increase or transformation. Otherwise, any interested party may seek dissolution two months after formal notice to regularize. Regularization before the first-instance decision on the merits ends the action.
- If net assets fall below one quarter of capital, the board of directors or executive board calls an extraordinary meeting within three months of approval of the accounts to decide on dissolution. If dissolution is rejected, equity must be restored to at least one quarter by the close of the second financial year following the year the losses were recorded; otherwise capital must be reduced under Article 357, respecting the legal minimum.
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
An SA is subject to corporate tax, subject to statutory exemptions. VAT depends on the transactions performed; local taxes apply under their own rules.
Being a company officer does not by itself determine affiliation to the employee scheme. CNSS coverage depends on how the duties are performed and, where an employment contract is invoked, on the existence of genuine employment.
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.
It has a heavy and structured operation, even complex. This provides additional security. However, it is less flexible than the LLC. For cooperation between existing companies, a lighter structure such as the GIE may also be considered. 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
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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 of registration with the commercial register. Shares issued for contributions in kind are fully paid up on issue.
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. Law 17-95 imposes no general residency or nationality condition on shareholders, but sector and investment rules also apply. The supervisory board chairman must be a natural person; a vice-chairman is optional and, if appointed, must also be a natural person. Board members hold the shares required by the articles of association.
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?
If shareholder numbers remain below five for more than one year, any interested party may seek judicial dissolution; the court may allow up to one year to regularize, and dissolution is avoided if regularization occurs before the first-instance decision on the merits. Capital reduced below the legal minimum must be restored or the company transformed within one year; otherwise dissolution may be sought two months after formal notice, with regularization before judgment ending the action. If net assets fall below one quarter of capital, an extraordinary general meeting must be called within three months of approval of the accounts to decide on dissolution. If rejected, equity must be restored to at least one quarter by the close of the second financial year following the year the losses were recorded; otherwise capital must be reduced under Article 357, respecting the legal minimum.
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