In brief: The shareholders’ agreement is a confidential extra-statutory agreement that organizes the relations between shareholders as a complement to the articles of association. Based on DOC Art. 230 (binding force of contracts), it allows for pre-emption, tag-along, drag-along, anti-dilution and non-compete clauses that the articles of association cannot always accommodate. It is an indispensable tool for multi-partner SARLs (LLCs), SAS companies with investors and joint ventures.
What is a shareholders’ agreement?
The shareholders’ agreement (pacte d’associés or pacte d’actionnaires in SA and SAS companies) is a private law contract entered into between all or some of a company’s shareholders. It regulates their mutual relations on matters that the articles of association do not address or address insufficiently.
Legal basis in Morocco
Morocco does not have a specific law governing shareholders’ agreements. Their validity rests on the Dahir des Obligations et Contrats (DOC), notably:
- Art. 230: “Validly formed contractual obligations have the force of law between those who have made them”
- Art. 2: Freedom of contract, within the limits of public order and good morals
- Art. 62-65: Conditions of validity (consent, capacity, lawful object, lawful cause)
The agreement is therefore fully valid and enforceable between its signatories, provided it respects these fundamental principles and does not contradict the mandatory provisions of company laws (Loi 5-96 for the SARL, Loi 17-95 for the SA, Loi 19-20 for the SAS).
Shareholders’ agreement vs articles of association: key distinctions
| Criterion | Articles of association | Shareholders’ agreement |
|---|---|---|
| Publicity | Filed with the court, accessible to third parties | Confidential, between signatories only |
| Enforceability | Erga omnes (against all) | Inter partes (between signatories) |
| Enforceable against the company | Yes | No (unless the company is a party to the agreement) |
| Amendment | EGM with legal quorum and majority | Agreement of signatories only |
| Sanction for breach | Nullity of contrary acts | Damages, penalty clause, specific performance |
| Flexibility | Governed by law | Great contractual freedom |
This distinction is fundamental: a third party who purchases shares in violation of a pre-emption right provided only in the agreement cannot be forced to return the shares. Only the defaulting signatory can be ordered to pay damages. This is why it is often recommended to duplicate certain clauses of the agreement in the articles of association.
Essential clauses of the shareholders’ agreement
1. Pre-emption clause
The pre-emption clause grants signatory shareholders a priority right to buy back the shares that another signatory wishes to sell, before any sale to a third party.
Typical mechanism:
- The selling shareholder notifies their intention to sell (price, identity of the buyer)
- The other signatories have a deadline (30 to 90 days) to exercise their right
- If exercised, the sale takes place on the same terms
- If not exercised, the seller is free to sell to the third party
This clause is complementary to the approval clause provided by the articles of association in SARLs (Art. 58 Loi 5-96).
2. Approval clause
The approval clause allows controlling the entry of new shareholders. If it already exists in the articles of association (mandatory in the SARL for transfers to third parties), the agreement can strengthen it by:
- Extending approval to transfers between shareholders
- Specifying refusal criteria
- Setting the price determination procedures in case of refusal
3. Tag-along clause (joint exit)
The tag-along protects minority shareholders. If a majority shareholder sells their shares to a third party, minority signatories of the agreement can demand to be included in the sale, on the same terms and conditions.
Objective: prevent the majority shareholder from “selling and leaving” while leaving minority shareholders with a new shareholder they did not choose.
4. Drag-along clause (forced sale)
The drag-along is the reverse mechanism: it allows a majority shareholder (or a group of shareholders representing a determined percentage, often 66% or 75%) to force minority shareholders to sell their shares jointly, on the same terms.
Objective: facilitate the global sale of the company. A buyer generally requires 100% of the capital; without drag-along, a blocking minority shareholder can cause the deal to fail.
5. Anti-dilution clause
This clause guarantees a shareholder the maintenance of their ownership percentage in case of a capital increase. It can take two forms:
- Full ratchet: the subscription price is adjusted to the lowest price of the last issuance
- Weighted average: the price is adjusted according to a weighted average
Anti-dilution is particularly important for investors in SAS companies and startups going through multiple funding rounds.
6. Non-compete clause
It prohibits signatory shareholders from engaging in an activity competing with the company’s business, during the term of the agreement and often after the shareholder’s exit (for a defined duration and geographic scope).
To be valid under the DOC and case law, the non-compete clause must be:
- Limited in time (2 to 5 years after exit)
- Limited in scope (geographically defined)
- Proportionate to the company’s business
7. Board seat allocation
In SA and SAS companies with a board of directors or supervisory body, the agreement can provide for the allocation of seats among different shareholder groups. This guarantees minority representation in governance bodies.
8. Dividend distribution policy
The agreement can set a minimum distribution rate of profits (for example, 50% of distributable earnings) or a distribution schedule. This protects shareholders who expect a return on investment against an excessive retention policy.
9. Lock-up clause (blocking period)
The lock-up clause prohibits signatories from selling their shares for a determined period (generally 2 to 5 years). It ensures shareholder stability during the company’s launch or development phase.
Validity and duration of the agreement
Recommended duration
The agreement can be entered into for a fixed term (recommended) or an indefinite term:
- Fixed term: the agreement expires on the agreed date. More legally secure.
- Indefinite term: each signatory can unilaterally terminate it with reasonable notice (Art. 230 DOC). Risk of instability.
In practice, the agreement’s duration is often aligned with the company’s duration or with a future event (IPO, global sale, investor exit).
Sanctions for breach
The agreement must provide for the consequences of its breach:
- Penalty clause: predetermined lump-sum compensation (e.g., 20% of the share value)
- Specific performance: the judge may order performance in kind if feasible
- Damages: compensation for the loss suffered, based on the DOC
Including a penalty clause is strongly recommended as it avoids debates over the quantum of damages.
Practical cases
Startup with investor
A founder creates an SAS and welcomes an investment fund into the capital. The agreement provides for:
- Anti-dilution (full ratchet) in favor of the investor
- Tag-along for the investor if the founder transfers control
- Drag-along in favor of the founder and investor jointly (from 75% of capital)
- Lock-up of 3 years for the founder
- Governance ratchet: one board seat for the investor from 20% of capital
Family LLC
Three family members create an SARL. The agreement organizes:
- Family pre-emption: in case of sale, other family members have priority
- Non-compete: no shareholder can create a competing business
- Minimum distribution: 40% of net income distributed each year
- Mediation clause: any dispute is submitted to a mediator before court proceedings
Joint venture
Two companies (Moroccan and foreign) create a joint subsidiary. The agreement provides for:
- Parity governance: each partner appoints an equal number of directors
- Veto right on strategic decisions (investments above threshold, borrowing, asset disposal)
- Reciprocal drag-along and tag-along
- Deadlock clause: resolution mechanism (arbitration, put/call) in case of decision-making gridlock
- Regulated agreements between the partners and the subsidiary
Frequently asked questions
Is a shareholders’ agreement mandatory in Morocco?
No, a shareholders’ agreement is not mandatory. It is an optional extra-statutory agreement, complementary to the articles of association. However, it is strongly recommended as soon as a company has multiple shareholders, especially in startups with investors, joint ventures or family LLCs, to anticipate conflicts and organize governance in detail.
What is the difference between a shareholders’ agreement and the articles of association?
The articles of association are a public document, enforceable against third parties and the company, filed with the clerk of the commercial court. The agreement is a confidential contract, enforceable only between its signatories (inter partes). The agreement offers more flexibility to organize relations between shareholders, but its breach can only be sanctioned by damages or a penalty clause, unlike the articles of association whose breach may result in the nullity of contrary acts.
What are the essential clauses of a shareholders’ agreement?
The essential clauses are: the pre-emption clause (buyback priority), the tag-along clause (joint exit to protect minority shareholders), the drag-along clause (forced sale to facilitate the global disposal), the non-compete clause, the anti-dilution clause and the lock-up clause (share blocking period). A penalty clause is also recommended to sanction breaches.
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