Kamal Habachi of HB Law Firm in Casablanca looks at the latest developments in the country’s legislature
Morocco has become a regional hub in Africa and the preferred regional business center due to its strategic location.
Aware of the fact that investment is a key factor to ensure sustainable and sustained economic growth, Morocco has liberalised its economy by easing procedures, providing better protection to private operators through introducing new laws aiming at improving investment conditions and, thus, acquiring significant flow of domestic and foreign private capital.
Furthermore, Morocco is going through an ongoing legislative reform regarding most of its business laws
1 Recently enacted legislation
a) The Capital Market
The Conseil Déontologique des Valeurs Mobilières (Securities Rules and Ethics Council), has changed its name to become the Moroccan Capital Market Authority, abbreviated to AMMC, was enacted on March 13 2013 with the new Financial Market Law (FML).
The innovations introduced by the FML are primarily intended to ensure the independence of the AMMC (Autorité Marocaine des Marchés de Capitaux) vis-à-vis the government, then to establish a new system of operation and organisation of the authority and finally to strengthen the powers of the internal organs of the same authority.
Previously considered a public institution subject to State control, the authority of the market is now a public legal entity with financial autonomy. The FML states, however, that state control of the market authority is exercised through a government commissioner whose missions are defined.
Furthermore, the independence of the AMMC is also noted, as the President of the Securities Commission and not the Prime Minister now manages the Authority.
The FML also grants to the President of the AMMC the powers of sanction, under which they may impose disciplinary and financial sanctions. Also, one of the major innovations is that the AMMC can perform, at any time, spot checks of people and organisations under its supervision, to ensure their compliance with the laws and regulations applicable to their activities.
b) The Securitisation Act
The scope of securitisation is being broadened to include the sukuk (Islamic bond) certificates that are securities representing an undivided right of use of each holder of eligible assets acquired or to be acquired or investments made or to be made by the issuer of such securities.
Moreover, the scope of the securitisation of eligible assets is being broadened to include tangible assets, movable and immovable properties.
The new law also introduces a “fund of securitisation” that works as a co-ownership between shareholders. It could also acquire legal personality subject to the decision of the managing institution and to its registration in the commercial register.
c) The Consumer Protection Act
The Consumer Protection Act, which came into force on April 2011, protects consumers by preventing unfair trade practices in consumer transactions. This Act main provisions are related to :
• The ban of unfair contract terms;
• Rules relating to misleading advertising and comparative advertising;
• Rules on contracts concluded at a distance;
• Rules on loan and credit agreements
2 The draft legislation
a) Banking Law
The main modifications that the bill relating to Banks and similar financial institutions provides are as follows:
• The participating banks will provide financial products in compliance with the Shariah.
• The participating banks must have an audit board whose main mission is to identify and prevent the risk of non compliance of its operations and activities in accordance with the recommendations of the Higher Council of Ulemas.
Also, the bill provides the creation of a coordination and monitoring board of systemic risks. The board is entrusted with several missions including the analysis of the financial sector’s situation and the assessment of potential systemic risks.
• The Bill provides also the possibility of the Competition Authority to provide advice in case of mergers in which a bank or a similar financial institution is involved.
b) Joint Stock Companies Law
A Draft Law related to joint stock companies SA (the “Project”), brings amendments regarding transparency in the functioning of companies. The Project revises procedures concerning regulated agreements.
On the regulated agreements procedure, the Project completes the law 17-95 by expanding these regulated agreements to directors, and by putting the obligation to communicate them to the chief executive officer, who will have the obligation to send the list to other members of the Board of Directors.
Furthermore, the Project establishes the obligation to publish the special report of the auditor that was established under regulated agreements in publicly traded companies.
Concerning the procedure for redemption by the company of its own shares, the Project has reduced the period during which the company should make the sale of treasury shares. The deadline has been changed from one year to six months. At the expiration of this period and if the transfer is not done, such shares shall be cancelled.
Also, the Project imposes the creation of an audit committee wish is composed of a board of directors or the supervisory board, excluding those who are exercising other functions within the company.
3 Taxes and Investment protection
Corporate Tax applies mandatorily to income and profits of capital companies, public institutions and other corporations that carry out lucrative transactions and on an irrevocable basis to partnerships. Normal rate is about 30%, besides, specific rates and partial or total exoneration applies for certain products and payments.
VAT applies to industrial, craft, commercial and liberal activities, as well as import operations. There are three rates:
• A standard rate of 20%
• Reduced rate of 7% for certain consumer products
• 10% on certain food products
On the other hand, Morocco has ratified international conventions relating to the guarantee and protection of investment. These include agreements on the establishment of:
• The International Center for Settlement of Investment Disputes (ICSID)
• The Multilateral Investment Guarantee Agency (MIGA)
• The Inter-Arab Organisation for Investment Guarantee Corporation
Furthermore, Morocco has signed agreements with several countries to avoid double taxation with respect to income tax and has set up a regime of convertibility for foreign investment. It allows investors to freely carry out their investment in Morocco and transfer, directly through the banking system, revenues generated by these investments and their sale or liquidation.
Partner
HB Law Firm
Casablanca
About the author
Dr Kamal Habachi is a Corporate Partner at HB Law Firm. He is admitted to the Casablanca Bar Association. He received his PhD from a French University.
He has significant experience in M&A transactions, commercial contracts and restructuring.
He is specialized in corporate law, finance law, contract law, and securities law. Kamal speaks four languages: Arabic, French, English and Spanish.
Salima Bakouchi
Partner
HB Law Firm
Casablanca
About the author
Salima Bakouchi is a Partner at HB Law Firm. She was admitted to the Casablanca Bar Association in 1995. She worked in one of the leading law firms in Morocco, where she gained valuable experience as a legal advisor in different sectors.
She has handled a wide range of transactions in various sectors and conducted many seminars in copyright, consumer law and competition law both in Morocco and abroad.
She is specialized in intellectual property law, Finance & Banking law, Corporate Law, administrative law, labor law, commercial law, competition law and ADR. Salima speaks three languages: Arabic, French and English.