Choosing the right corporate form: Société Anonyme or SARL?
Dear reader, this article is designed to give you an overview of the two types of company, the société anonyme (SA) and the société à responsabilité limitée (SARL), with a comparison of characteristics leading to an analysis and conclusion for choosing the right corporate form.
The law has established several forms of company, with different operating rules and different consequences for the legal liability of associates.
What's more, the choice of corporate form has a direct impact on the tax and social security regimes applicable to income from the business.
Limited company
Definition of a société anonyme: In Morocco, the société anonyme is a form of limited liability company used either by companies listed on the stock exchange, or by entities carrying out large-scale projects, given the security and control over investment it provides.
Indeed, its management and tax rules are unique, so how do you set up a limited company in Morocco?
1- Shareholders
The SA in Morocco must at least be composed of 5 shareholders.
The liability of each shareholder is limited to the amount of his or her contribution. This principle does not apply in the event of proven mismanagement.
Natural and legal persons can participate in the capital of an S.A. There are no residency or nationality requirements.
2- Share capital
The share capital of the limited liability company in Morocco is set at :
- Three million (MAD 3,000,000) for a company making a public offering and
- Three hundred thousand (300,000) for the opposite.
Cash contributions must be fully subscribed and paid up to at least a quarter of their nominal value at the time of incorporation; the remainder must be paid up within three years of registration, by decision of the Board of Directors or the Management Board.
3- Statutory auditor
At least one statutory auditor must be appointed for each public limited company in Morocco.
However, publicly traded companies are required to appoint at least two statutory auditors.
4- Administration
- In a one-tier SA, the Board of Directors runs the company.
The Board comprises a minimum of three and a maximum of twelve members. The law increases this number to 15 members when the company is publicly traded.
- In the dualistic SA, there is a Management Board and a Supervisory Board.
The term of office of directors is determined by the Articles of Association, but may not exceed 6 years in the case of appointment by the Annual General Meeting, and 3 years in the case of appointment by the Articles of Association.
The Board of Directors elects a Chairman from among its members, who must be a natural person.
The company's general management is the responsibility of the Board of Directors, which appoints a Chief Executive Officer (CEO) to manage the company and, if necessary, one or more Deputy CEOs to assist the CEO, and a Chairman (sample minutes of the Ordinary General Meeting appointing the Chairman of the Board of Directors), who may combine his duties with those of CEO.
A legal entity may be appointed as a director. When appointed, the legal entity must designate a permanent representative who incurs the same civil and criminal liability as if he were a director in his own name.
Under the provisions of article 63 of law no. 17-95, the Chairman of a société anonyme is elected by the Board of Directors from among the individual directors. The Chairman may be a foreigner and may be bound by an employment contract (requiring special technical skills).
The Chairman's term of office may not exceed that of his directorship, and he may be dismissed at any time by the Board of Directors.
- Chairman's authority
Articles 67, 74 and 74 bis of Act no. 17-95 stipulate that the Chairman of the Board of Directors is no longer responsible for the general management of the société anonyme in his capacity as Chairman of the Board of Directors;
The Chairman of the Board represents the Board of Directors.
He organizes and directs the work of the Board of Directors, on which he reports to the Annual General Meeting.
It oversees the proper functioning of the company's governing bodies and ensures, in particular, that the directors are able to fulfill their duties;
- General Manager's authority
1- the power to grant sureties, endorsements or guarantees in the name of the Company, up to an overall amount set by the Board of Directors or up to a specific amount per commitment;
2- on the authorization of the Board of Directors, to grant sureties, endorsements or guarantees in the name of the company to tax and customs authorities, with no limit on the amount;
3- delegate the above two powers to grant sureties, endorsements or guarantees on behalf of the Company.
He is entitled to be assisted by Chief Operating Officers appointed on his recommendation by the Board of Directors, which assigns them specific responsibilities and sets their remuneration.
- Composition of the Executive Board :
The number of members may not exceed five. In addition, the law increases this number to seven when the company makes a public offering.
The Management Board carries out its statutory duties under the supervision of a Supervisory Board, which appoints its members.
Directors' terms of office must be limited to between two and six years.
- Composition of the Supervisory Board :
The Supervisory Board must have a minimum of three and a maximum of twelve members; fifteen members for companies making public offerings.
Supervisory Board members are appointed in the Articles of Association at the company's creation (or by the AGM during the company's lifetime), and must not be members of the Management Board.
Their term of office may not exceed six (6) years.
THE LIMITED LIABILITY COMPANY "S.A.R.L".
The SARL is a commercial company that represents an intermediate type between partnerships and corporations.
1- General features
A single person - the sole shareholder - can form a SARL (Sarl-Au).
The maximum number of associates may not exceed 50.
The amount of share capital is freely determined. No minimum is required. In return for this freedom, the capital must be fully subscribed and paid up.
A SARL may be managed by one or more individuals (manager(s)), who are individually or jointly liable to third parties.
Decisions are taken at the Annual General Meeting unless otherwise stipulated in the Articles of Association.
A SARL's management is audited by one or more statutory auditors if sales exceed 50 million dirhams.
2- Constitution
In Morocco, the company equivalent to the limited liability company (SRL) is the limited liability partnership (SARL).
As the minimum share capital is 1 dirham, we need to know the amount of the share capital, which must be fully subscribed and paid up at the time of incorporation.
Under the provisions of article 51 of law 5-96, the share capital, divided into equal shares, must be subscribed in full by all associates. With regard to the payment of the share capital, the shares must :
- when the shares represent contributions in kind, be fully paid up
- when the shares represent cash contributions, they are must be paid up to at least 1/4 of the share capital. The remaining 3/4 must be paid up, by decision of the Managing Director, within a maximum period of 5 years from the date of the company's registration in the Commercial Register, except in the case of a change in the share capital during the 5-year period, which requires the share capital to be fully paid up before any new shares are subscribed and paid up in cash.
3- Manager
The number of managing partners is freely determined in the articles of association. The managing partner(s) may be chosen from among the associates or from outside their ranks. However, the articles of association may validly reserve the right to appoint only partners as managing partners of the company.
The appointment of managers other than associates is subject to the conditions set out in article 75-2 of law 5-96, under which this decision must be taken by associates representing at least ¾ of the share capital.
When a limited liability company (SARL) is formed, the managing partners are appointed in the articles of association or in a subsequent deed. If they are not named in the articles of association, they must be appointed as soon as possible, as the legal publicity required for registration in the Commercial Register must mention their identity.
Only natural persons may act as managers of a limited liability company (SARL).
INFORMATION COMMON TO BOTH TYPES OF COMPANY
- Company name
The company name is established by the issue of the negative certificate.
The Office Marocain de la Propriété Industrielle et Commerciale (OMPIC), which is responsible for issuing names at national level, requires the submission of five (5) name proposals for the company, in order of preference.
Before applying for a negative certificate, we make sure that the proposed names are not already in use.
We need three (3) names, in order of preference, which we should submit to the Ompic.
The application is made on a form to be completed together with a copy of the beneficiary's CIN identity card or passport.
- Company headquarters
The documents that may define the company's registered office are:
- 3 copies of a lease agreement in the company's name. The contract must bear legalized signatures;
- A deed of purchase for the premises or business;
- Proof of address.
- Direct debit
If it's not obvious that the company to be set up should take out a lease from the outset, we suggest that you set up a tax domicile as a first step.
We work with a business center in Casablanca that we can recommend. Direct debit fees are :
- 1,200 dhs excl. tax for 6 months;
- 5,000 exclusive of tax for 2 years.
Please note that a domiciliation is valid for 6 months. After this period, the company must submit a new certificate of domiciliation to the court.
We would like to inform you that when the company signs a lease, legal and administrative formalities will have to be carried out in order to transfer the registered office (drawing up of the EGM minutes, amendment of the Commercial Register, updating of the articles of association, publications, etc.).
Drawing up the articles of association
The articles of association must contain the following information:
- Identity of associates // shareholders
- Company name
- Corporate purpose
- Head office
- Share capital
- Capital breakdown
- Appointment of first managing directors/administrators
- Signatories authorized to bind the company
- Certificate of deposit of funds
To open the company's bank account, you'll need to put together a composite file:
- a copy of the articles of association signed by the associates;
- a copy of the negative certificate ;
- copy of CIN, passport for foreigners or residence permit for foreign residents.
The completion of these formalities with the bank gives rise to the issue of a freeze certificate. These funds remain unavailable until the company is finally registered with the Registre de Commerce.
You may have a dirham account and a foreign currency account, if transactions are carried out abroad. In the latter case, a file will need to be set up with the foreign exchange office to facilitate transactions.
We'll take care of opening the company's bank account.
- Tax system
The tax regime for the société anonyme in Morocco is similar to that of the SARL. The applicable taxes are :
- corporate income tax
- value-added tax (VAT)
- also to local taxes such as business taxes and taxes on communal services
Conclusion and summary
After analyzing the different characteristics of the société anonyme and the société à responsabilité limitée, the SARL has proved to be the most suitable corporate form.
If the company runs into difficulties, the risk is limited to losing the initial investment, and creditors will not be able to take legal action against the partners' personal assets.
Like the SA, the SARL is a legal form that can take the form of a one-person company (i.e. with a single shareholder).
This is a definite advantage if you're planning to set up your own business.
Admittedly, the operation of a public limited company is cumbersome and complicated. The particularly tightly structured operation of a public limited company is often seen as the main disadvantage of this status. The sheer number of management bodies involved is likely to slow down certain procedures.
Not to mention the obligation to appoint an auditor!
In fact, the majority of Belgian public limited companies setting up subsidiaries in Morocco opt for the limited liability form at the time of incorporation.
Subsequently, as the company develops, and depending on the scale of the project, a change of legal form may be considered.
We invite you to discover the 3 golden tips for creating a successful business by clicking on the article below.
3 useful tips for a successful start-up!
Faithfully yours,
Ilham Taha-Bouamri
Chartered accountant and tax specialist
