CREATIVE PROCESSES
LEGAL FORM
When deciding to set up a structure within which a project will be carried out, it is important to choose an appropriate legal status for it. This choice must take into account the size, objectives and other factors relating to the project, whilst also considering the resulting tax and social security implications, amongst others.
Morocco offers a variety of legal structures for businesses, whether they are partnerships or companies. These include the Sole Trader (EI), the Limited Liability Company (SARL), the Public Limited Company (SA), the Simplified Joint-Stock Company (SAS), and many others. Here is a brief overview of some of these legal forms:
EI: Sole trader
Run by a natural person, a sole trader business is simple to set up and does not require any start-up capital. Unlike other legal forms, there is no requirement to publish a notice in the press when setting it up. In terms of tax and duties, a sole trader is liable for income tax, VAT and business rates (patente). A key feature of a sole trader is that the entrepreneur is personally liable for the business’s debts, and their personal assets are treated as part of the business’s assets.
SARL: Limited Liability Company
Widely used as a legal form, the SARL is a type of commercial company that lies midway between partnerships and joint-stock companies. It may be formed by one or more partners (up to a maximum of 50). It acquires legal personality upon its registration in the commercial register. The shareholders are liable only to the extent of their capital contributions, and the appointment of an auditor is compulsory only for companies with a turnover exceeding 50 million dirhams. As regards taxation, the SARL is subject to income tax, VAT and business rates.
SA: Société Anonyme
A public limited company (SA) is a legal form suited to large-scale projects. To set one up, you need at least five partners (known as shareholders) and a minimum share capital of 300,000 dirhams. As with the SARL, one of its advantages is that each shareholder’s liability is limited to the amount of their capital contribution.
A public limited company (SA) is subject to specific management rules (such as the distribution of dividends, etc.) and is governed by a board of directors and a managing director, or by an executive board and a supervisory board. In terms of tax, a public limited company is subject to income tax, VAT and business rates.
SAS: Simplified public limited company
A simplified public limited company is generally set up by two or more individuals or legal entities. These are often companies wishing to establish a joint subsidiary or to create an entity that will become their joint parent company.
The amount of the share capital of a simplified public limited company is determined at the shareholders’ discretion. The share capital of an SAS is determined at the shareholders’ discretion (there is no statutory minimum). Under this legal form, the shareholders’ personal assets are protected (they are liable for losses only up to the value of their contributions, whether in cash or in kind).
One of the advantages of an SAS (particularly compared to an SA) is that shareholders are free to manage the company as they see fit (in accordance with the rules they lay down in the articles of association). Unless otherwise specified in the articles of association, shareholders may not transfer their shares (for a period of 10 years). This clause prohibiting the transfer of shares helps to protect the investments of companies that set up an SAS.
It is important to note that SAS status, which offers the flexibility and benefits mentioned above, also has some drawbacks. In particular, the share capital must be paid up at the time the articles of association are signed (the shareholders are obliged to make the funds available as soon as the company is formed) and an SAS is barred from making any public offering of shares.
Finally, from a tax perspective, there is also an advantage for the SAS. The corporation tax to which it is subject is calculated at a reduced rate where profits are limited (a reduced rate of 10 per cent if the net profit does not exceed 300,000 DH).
SCA: Limited partnership with share capital
An SCA is a legal form of company characterised by capital divided into shares. It is formed by one or more general partners and at least three limited partners (the shareholders). The general partners act as traders and bear unlimited and joint and several liability for the company’s debts, whilst the limited partners are liable for losses only up to the amount of their capital contributions. It should also be noted that the general partners remain jointly and severally liable to the limited partners.
Here are some of the characteristics of the SCA:
- It may raise funds through public offerings;
- General partners are liable for income tax;
- The company has the choice between income tax and corporation tax.
