Creating an SARL in Morocco (2024): Complete Guide to Limited Liability Companies

The Limited Liability Company (SARL) in Morocco is the most widely adopted legal structure for business creation, accounting for approximately 90% of all company registrations. It provides limited liability for partners, requires no mandatory minimum capital, and ensures rapid establishment. Subject to Corporate Income Tax (IS) and potentially VAT, it is suitable for both Moroccan entrepreneurs and foreign investors alike.

Why the SARL is the Preferred Legal Vehicle in Morocco

The success of the SARL in Morocco is no accident. It offers significant legal, fiscal, and flexibility advantages, making it the preferred choice for investors.

Even with the introduction of new forms like the Simplified Joint-Stock Company (SAS) by Law 19-20, the SARL remains the most frequently chosen option. It is still early to fully assess the long-term impact of newer structures (only in effect since July 2021).

• Limited Liability: Partners (shareholders) are only liable up to the amount of their contributions.
• Flexibility: Adapts well to various project structures and business needs.
• Ease of Establishment: Streamlined setup process, often supported by experts like iHub for company formation.
• Tax Advantages: Particularly favorable compared to partnerships.

An SARL in Morocco falls under the scope of Corporate Income Tax (IS). Depending on its activity, it may also be subject to Value Added Tax (VAT). Local taxes may apply based on specific circumstances.

How to Create an SARL in Morocco

To establish an SARL in Morocco, several key steps are involved:

• Secure a registered office address or opt for business domiciliation.
• Obtain a negative certificate for the company name.
• Draft articles of association compliant with SARL law. These must be signed by all partners and detail:
• The company's legal form and corporate purpose.
• Identity and addresses of partners.
• Location of the registered office (property, lease, or domiciliation).
• Company duration and denomination.
• Amount of share capital and its distribution among partners.
• Details of management and their prerogatives.
• Jurisdictional commercial court.
• Procedures for capital increases or reductions (statutory amendments).
• Register the articles of association and other relevant acts.
• Immatriculate the company with the Commercial Register and CNSS (National Social Security Fund).
• Obtain tax identifiers (Patente, IF).
• Complete legal publications in an official journal and bulletin.

The drafting of an SARL's articles of association should not be taken lightly, as it defines the rights and obligations of partners and management procedures. It is advisable to consult a legal or accounting expert for this crucial step. For complex partner structures, a Shareholders' Agreement might also be necessary.

Subsequent Formalities

• Obtain a capital blocking certificate if capital exceeds 100,000 dirhams.
• Appoint managers and define their scope of responsibilities.
• Complete legal and administrative formalities, which can often be processed via Regional Investment Centers (CRI) or directly with administrations.
• Create a company bank account: This requires the registered articles, the J-model of the Commercial Register, legal announcements, and identification of the manager(s). The manager must be present to sign signature specimens.

SARL in Morocco: Limited Liability for Partners

The SARL in Morocco is a commercial company by form, meaning it is considered commercial regardless of its specific activity. Partners do not automatically acquire merchant status, making it ideal for investors whose primary profession is incompatible with merchant activities.

In the event of dissolution or liquidation of the SARL, partners are only liable for losses up to the extent of their contributions. This is why it is called limited liability, making the SARL a favored structure, especially for service offshoring companies settling in Morocco.

However, SARLs cannot be adopted by companies engaged in banking, credit distribution, insurance (except agents/brokers), or savings and capitalization activities (Art. 44 of Law 5-96).

Management Flexibility of the SARL

The SARL is a hybrid structure, bridging the gap between capital companies and partnerships. Its advantages appeal to project initiators:

• Number of partners can range from 1 to 50.
• No minimum capital required, and no obligation to block capital if it's less than 100,000 dirhams. When capital is required, at least 25% must be paid upon creation.
• Simple formation procedures, typically completed within two weeks.

An SARL must have one or more managers, who must be natural persons but not necessarily partners. Managers are appointed in the articles of association and can be removed by partners at any time.

The appointment of a statutory auditor is not mandatory unless the SARL's turnover exceeds 50 million dirhams.

SARL in Morocco: Is a Moroccan Partner Mandatory?

No, it is not mandatory to have a Moroccan partner. An SARL can be 100% owned by foreign partners and managed by foreign residents or non-residents. However, their physical presence in Morocco might be required, especially during the bank account opening process, as most banks require a pre-opening interview.

Intuitu Personae of Partners in an SARL

The personal relationship between partners is crucial in an SARL. Partners cannot sell their shares to third parties without the approval of the other partners. However, share transfers between existing partners are unrestricted.

When a partner wishes to transfer shares to an external party, an Extraordinary General Meeting (EGM) must first approve the new partner. Subsequently, a share transfer agreement must be signed, registered, and published.

What is the Partner's Liability in an SARL?

As mentioned, partners bear losses only up to their contributions. Thus, third parties cannot pursue their personal assets. In the event of judicial liquidation, partners risk losing their capital contributions but are not obliged to pay more.

However, this limited liability has exceptions. If a partner is also a manager and commits fraudulent or faulty acts leading to cessation of payments, their personal liability can be engaged. They also face criminal liability in cases of bankruptcy offenses, such as asset concealment, diversion of funds, preferential payments, or falsification of accounts.

For personal liability to be engaged, two conditions must be met:

• The partner must also be a manager.
• They must have committed intentional acts contributing to the company's bankruptcy.

SARL in Morocco: Mode of Operation

The SARL Manager

The SARL in Morocco operates through one or more managers who carry out daily management acts and represent the company (e.g., bank signatories, recruitment, contract signing). Managers are responsible for their management errors and for any illicit acts leading to cessation of payments. They report to partners during annual general meetings, presenting annual financial statements.

Partners can limit the manager's scope of action in the articles of association, through prohibitions (e.g., prohibition of asset sales) or limitations (e.g., requiring partner authorization for bank loans).

Partners in Assembly

During partner meetings, decisions are made on matters such as the approval of annual accounts, validation of regulated agreements, and dividend distribution. Each partner's voting rights are proportional to their capital contribution.

Although a statutory auditor is not mandatory by default, any minority partner can request their appointment. Law No. 21-19, effective since April 29, 2019, introduced significant changes to SARL law, enhancing minority shareholder rights:

• Regulation of dividend distribution timelines.
• Possibility for minority partners (from 10%) to convene meetings.
• Right for minority partners (from 5%) to include proposals in resolution drafts.
• Ability to block significant asset sales (from 25%).
• Right to request the appointment of a statutory auditor via a judge (no minimum shareholding required).

SARL in Morocco: The Tax Regime

The Limited Liability Company is subject to Corporate Income Tax (IS) under general law conditions. Since 2023, the progressive scale (10% to 31%) has been replaced by proportional rates: 20% for profits below 100 million MAD and 35% beyond (Art. 19-I CGI 2026).

Depending on its activity, an SARL may also be subject to Value Added Tax (VAT), which generally applies to all commercial, industrial, and service activities, with agricultural activities typically being exempt. VAT is due upon collection, though an SARL can opt for the debit regime.

Additionally, the following local taxes apply:

• Professional Tax (with a 5-year exemption for newly created companies).
• Municipal Services Tax, if the company is located within an urban area.

Important: The SARL's tax obligations begin from its creation. Certain declarations, such as quarterly VAT declarations and year-end balance sheets, may be due even in the absence of business activity. Timely fulfillment of these obligations is crucial for compliance, which can be effectively managed with professional accounting services like those offered by iHub for bookkeeping.

Conclusion

The SARL in Morocco offers compelling advantages that attract many entrepreneurs. Its submission to Corporate Income Tax (IS) with favorable proportional rates, coupled with the limited liability of its partners, makes it a secure and attractive option. The absence of a mandatory statutory auditor (unless specific thresholds are met) further simplifies its operation. These characteristics collectively make the SARL the most widely used legal form for entrepreneurs establishing their businesses in Morocco.