This piece highlights issues for consideration when starting a foreign business in Morocco in four areas: 1) foreign business start-up, 2) access to industrial land, 3) foreign ownership issues across sectors, and 4) commercial dispute arbitration.
Foreign Business Start-Up
With 8 procedures and 18 days, the process of establishing a foreign-owned subsidiary in Morocco is faster than both the IAB regional average for the Middle East and North Africa and the IAB global average. Only 2 additional procedures are required of foreign companies. Except for French enterprises, which are exempt from this requirement, any foreign company wishing to establish a subsidiary in Morocco must provide an apostille, a translated copy of its articles of association, and an extract of the registry of commerce in its country of origin. There is no investment approval requirement. Instead, foreign companies must report the incorporation of the subsidiary a posteriori to the Foreign Exchange Board (Office National de Change) to facilitate repatriation of funds abroad (such as profits, dividends). This step usually takes 5 days to complete. Registration documents are available online and registration is made at a one-stop shop€”Centre Regional d’Investissement (CRI)€”that also serves for tax, social security, and VAT registration. Foreign companies in Morocco are not allowed to hold foreign currency bank accounts. Instead, they can hold Convertible Export Promotion Accounts (CCPEX), which allow them to receive and transfer foreign currencies. The foreign currency credited in CCPEX accounts is converted into Moroccan dirham (MAD) and re-converted to foreign currency as needed for repatriation purposes. Morocco has a minimum capital requirement of MAD 10,000 (~$1,200) for domestic and foreign companies, 25% of which must be paid in at registration.
Access to Industrial Land
Foreign companies seeking to access land may lease or buy privately or publicly held land, with the exception of agricultural land, which foreign entities are prohibited from owning. Publicly held land may be leased or bought with approval from the relevant authority. Foreign companies seeking to lease publicly held land must first obtain approval from the Regional Center for Investment. There is no clearly defined procedure for leasing publicly held land and the process can take up to a year. Registration of all land transactions is mandatory. The maximum duration for a lease contract is 15 years. There are no restrictions on the amount of land that may be leased. The lease contract offers the lessee the right to sublease, subdivide, and/or mortgage the leased land, subject to the terms of the contract. Most land-related information can be found in the national registry and cadastre.
Foreign Ownership Issues across Sectors
Foreign companies seeking to access land may lease or buy privately or publicly held land, with the exception of agricultural land, which foreign entities are prohibited from owning. Publicly held land may be leased or bought with approval from the relevant authority. Foreign companies seeking to lease publicly held land must first obtain approval from the Regional Center for Investment. There is no clearly defined procedure for leasing publicly held land and the process can take up to a year. Registration of all land transactions is mandatory. The maximum duration for a lease contract is 15 years. There are no restrictions on the amount of land that may be leased. The lease contract offers the lessee the right to sublease, subdivide, and/or mortgage the leased land, subject to the terms of the contract. Most land-related information can be found in the national registry and cadastre.
Commercial Dispute Arbitration
Arbitration and mediation in Morocco are regulated by the Code of Civil Procedure (2007). The new law is based on French law and the UNCITRAL Model Law, but lacks provisions regarding interim measures and preliminary orders, the conduct of arbitral proceedings, and the grounds for refusing recognition or enforcement of arbitral awards. All commercial matters are arbitrable. Under the Civil Procedure Code, arbitrators must declare themselves to the general prosecutor of their local Court of Appeal. The prosecutor includes the registered arbitrators on an arbitrators’ list of the relevant Court of Appeal. Parties to arbitration proceedings in Morocco may only be represented by lawyers who are registered at the relevant Court of Appeal. The law expressly states that arbitrators must be impartial and independent, and must preserve the confidentiality of the proceedings. Domestic arbitration awards must be enforced within 15 days of rendering, which is not required of foreign arbitration awards. A commercial court of first instance is responsible for enforcement of arbitration awards (domestic and international). On average, it takes around 12 weeks to enforce an arbitration award rendered in Morocco, from filing an application to a writ of execution attaching assets (assuming there is no appeal), and 16 weeks for a foreign award. Court decisions enforcing an arbitration award can only be appealed for foreign arbitration awards.
Source: Investment Across Borders Report by The World Bank. The World Bank authorizes the use of this material subject to the terms and conditions on its website, http://www.worldbank.org/terms.”
