I’ve recently seen a number of companies set up by accountants working on the assembly line, with a number of problems/errors in the articles of association. But the most important, frustrating point is the capital.
In fact, all these companies had one thing in common: a capital of 100,000 dirhams, which is already a very handsome sum. The arguments put forward by these accountants were “but you don’t have to pay them, and everyone else does”.
You can even still find out-of-date documentation on expert (!) accountancy websites stating that the minimum capital for a SARL is 100,000 dirhams.
This is completely untrue, and can cause you many problems.
What is the minimum capital required to set up a company in Morocco?
Minimum capital of a public limited company: MAD 300,000
If the company is not on the stock market, its minimum capital is MAD 300,000.
Otherwise, it must be at least three million dirhams.
Minimum share capital for SARL or SARL d’A.U.: 1 dirham
(SARL : Société Anonyme à Responsabilité limité, limited liability company, AU, Associé unique, sole owner).
Since Law 24-10 of 30 June 2011, the minimum capital is only one dirham for SARLs and SARLs with a single shareholder, as “the partners are free to set the amount of capital“.
Yes, one dirham. One dirham is enough to incorporate a company in Morocco.
And before this law, it was 10,000 dirhams since law 24-10 of 2 March 2006.
In other words,
Why is this important? Because capital is not just a figure in your accounts, there are legal obligations.
Legal obligations in relation to share capital
The capital must be “paid up”
The capital represents the funds needed for the initial operation of the company and also what it owns itself.
The law requires :
- 25% of the capital must be paid into the bank account when the company is set up
- to finish paying in all the capital within five years of setting up the company.
So why do some accountants tell you “you don’t have to pay it in“?
Because up to 100,000 dirhams, there is no need to provide a certificate from the bank stating that a sum has been paid into the company’s bank account.
In short, these accountants are advising you not to comply with the law.
You cannot accumulate losses greater than 3/4 of your capital
When a company makes losses, they are shown on the balance sheet, reducing reserves and therefore “net capital” (share capital + reserves + retained earnings).
When a company has lost 3/4 of its share capital, it should normally be dissolved. An Extraordinary General Meeting of shareholders is required to extend the company. This decision must be followed by a capital increase to offset the losses within six months.
The right amount of share capital for an SARL, in practice
The “right amount” will depend on your company’s activity and how you finance it. A large amount of share capital gives an image of security and stability for those who are interested in it: mainly bankers and some suppliers.
If you need to finance inventory, premises or fixed assets, you need share capital to reassure the banks and enable you to borrow.
If you only provide services, don’t need to borrow, and aren’t going to respond to invitations to tender (particularly public tenders, where the financial structure of the company is always a factor), then you can make do with a minimum capital, which is necessary to finance the creation of your company and pay the initial costs. Between 6,000 and 10,000 dirhams, I would say.
It should be noted, however, that if you have a limited liability company (SARL d’A.U.) and are looking to borrow money, your bank will certainly ask you for personal guarantees.
How do you reduce your share capital?
If you have a share capital of 100,000 dirhams “for nothing”, it is perfectly possible to reduce it.
As with any change to the articles of association, you will need to hold an Extraordinary General Meeting and publish the new articles of association.
If you have creditors (suppliers, government, etc.), they can object to the reduction within 30 days and demand repayment of their debts. Of course, this only applies to large debts, not your electricity or internet bill!
Registration fees are 100 dirhams, plus legalization and publicity costs.
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