Are you planning to start a business?
Well, then, you must know what you are getting yourself into. You would have to prepare yourself for the grind of establishing a venture, facing red tape, and investing your time, resources, and intelligence to make it there.
Suppose Morocco has been on your mind lately to base your venture, then congratulations. Why? Because you have decided on a place that promises great opportunities and economic stability that enables establishing business easier. An optimally developed business environment, flourishing economy, advanced infrastructure, populous markets, low taxes, skilled and qualified workforce, and whatnot render the country a virtually perfect business destination. Owing to its strategic location and high connectivity with the EU, Arab League, Africa, Turkey, etc., it furnishes start-ups with access to a market of more than 1.3 billion consumers.
Although the process of establishing a business anywhere is mind-numbing to a certain extent, nonetheless, having the right knowledge supports you through the journey. You would be able to abide by the laws and be aware of the requirements you need to satisfy to launch a venture. Here, we shall walk you through everything you need to know about starting a business in Morocco. Read on and let your passion propel you to remarkable heights.
Starting a business in Morocco starts by coming up with a strong business idea that reflects the potential to stand in the market and ace its competitor. This is followed by creating an elaborate business plan which entails your product or service description, market size, marketing strategies, budget, etc. Now, choose a name for your business, set up a business bank account, and procure a negative certificate that would be utilized for the registration of your company.
You would also have to choose the legal structure of your firm and then get your domiciliation contract signed. Another document that you would have to get signed is the articles of association, which you may draft either by yourself or ask a lawyer or chartered accountant to do the job. Finally, submit your incorporation file to the local investment center (CRI).
Knowing the procedure of establishing a business is worthwhile and eases your journey. And thus, in the sections that follow, you will find a detailed account of the venture establishing process in Morocco in detail.
Process of setting up a business in Morocco
Setting up a business is fairly simple, and it involves only a few days to turn in the incorporation file to get your public limited or private limited company registered. Business opportunities in Morocco are immense, thanks to the geographic location of the country, terrific market, stable and flourishing economy, skilled and educated workforce, and more. Now, before you take the red-eye in your enthusiasm to the country to set up a business there, you need to amass knowledge on the business culture of Morocco, the process of starting a venture there, and how enabling its environment is for businesses, etc. Read on to know!
- Prepare a convincing business plan: An elaborate business is always a savior and a crucial part of launching a start-up. It entails the demand/ supply of product or service, market size, potential competitors, their strengths and weak points, marketing strategy, budget, etc. Investors and those who aspire to associate with your business would ask for a business plan, and then a solid one would help them decide whether or not to come with you.
- Choose a legal structure for the business: Next, you need to pick a legal structure for your venture. Business structures in Morocco come under three categories, which are:
- Capital companies: public limited company, limited partnerships with shares, public limited company, and private limited company.
- Branch office
- Partnerships: limited partnership, joint venture, and general partnership.
The most commonly preferred legal structure for companies in Morocco is the Public Limited Company (SA) and the Limited Liability Company (SARL). Choose the structure wisely, as it would impact your business and several decisions.
- Procure the negative certificate: Moroccan Office of Industrial and Commercial Property issues this administrative document known as the negative certificate. This document certifies the availability of the business names chosen by the person, which is then enlisted in the commercial register. One can submit the negative certificate application online mode via the OMPIC site.
- Sign a commercial lease/ domiciliation contract: To get your business registered in Morocco, you would be asked to show your registered office address. In this case, you may either rent an office location by signing a commercial lease agreement, or you may get domiciled in a business center. Owing to its simplicity and low cost, domiciliation is the most preferred option for business.
- Set up a business bank account: LLCs and SAs whose paid-up capital surpasses MAD 100,000 need to undergo this procedure necessarily. You would have to set up a temporary business bank account in a regional bank where the share capital of the company is then transferred. As soon as the transfer completes, you get a certificate of freezing from the bank.
- Sign the Articles of Association: If one was to name the most critical step in the company formation process, it would be that of drafting the articles of association of a company. These documents are the constitutive papers of the company, which include all the regulations and obligations that oversee the relationship between shareholders and the third parties. This document represents the constitution of the business. The Article of Association can be drafted via two methods:
- Scribe the document by yourself
- Let the corporate lawyer or chartered account prepare the document for you.
As soon as this step completes, the founding partners of the business would need to sign the final bylaws. Partners may or may not be physically present in Morocco.
- Submit the file of incorporation to CRI: To get your business registered with CRI in Morocco, you will need:
- Single kind of the CRI
- Representatives’ and manager’s passports or ID cards photocopies
- Trade register extract of the original company (if asked) and articles of association
- Final articles of association documents
- Negative certificate
All the documents of incorporation are filed with the local investment center (CRI), where a business address is registered.
- Withdraw the file of incorporation from CRI: The incorporation of the company is typically completed within 10 days of filing for it. CRI issuance requires the following documents:
- Registration certificate for the professional tax
- An existence declaration allocated by the tax authorities
- A notification form of the identifiers of the business
- Registration certificate from the CNSS (National Social Security Fund).
- Original documents of the registered articles of association
Hiring Employees in Morocco
After you have done all of the above steps and you are ready to kick off the operations of your venture, you would have to recruit staff and workers. You definitely should hire talented people to grow your firm, but without being extravagant in the process. In the early days of your venture, prefer hiring the least number of needed employees and staff. As the business mushrooms, you may add more people. However, as an employer, one must be familiar with the labor and employment regulations of the country in which you are planning to start a venture. With help from experienced consultants from Zimyo, all your human resources requirements can be efficiently handled.
Here’ we have it covered for you. Read on!
- Trial Period/Probation Period: Article 14 of the Moroccan Labor Code clearly states the duration of probationary periods as mentioned below:
- For indefinite period employment contracts:
- 15 days trial period for blue-collar workers.
- 1.5 months trial period for white collars.
- 3 months trial period for executive and related job roles.
- For definite period employment contracts:
- Maximum 2 weeks trial period for contracts less than 6 months.
- Maximum 1-month trial period for contracts less than 6 months.
Probationary periods can be stretched only one time.
- Leave and Holidays: Employees in Morocco who have been employed in the company for more than 6 months are entitled to:
- One a half-day of effective work per month employed.
- Employees below the age of 18 years must get two days of effective work per month employed.
Employees have the right to an extra one and a half-day for every 5 years employed, for up to 30 days, at the most. If an employee gets absent from work due to injury, sickness, or accident, he/ she would need to present an application within 48 hours of leave.
If sickness leave exceeds 4 days in a row, a medical certificate should be provided to the employer. If a person goes on sickness leave for over 180 days in a row in a calendar year, an employer has the liberty to assume the resignation of the employer.
- Maternity Leave: Female employees in Morocco have the right to get 14 weeks of paid maternity leave where they may choose to take the leave after delivery or in parts of 7 weeks before and 7 weeks post-childbirth. Female employees are also entitled to take leave beyond 14 weeks, given that the duration shall not exceed 90 days. A female employee can be granted up to and a further 1 year of maternity leave, which would be, however, unpaid and subject to the employer’s permission.
- Termination of Services: Employees can be dismissed on the following grounds in Morocco:
- Serious misconduct under the provisions of Article 39 of the Labor Code of Morocco. Serious misconduct may include disclosing professional, confidential information.
- Commit theft infringes trust, uses drugs, engages in corporeal mugging, insults seriously, is in a drunken state, etc.
- Deliberate or unexplained refusal to accomplish the tasks dished out by the employer.
- Unjustified or unnecessary absence from work for 4, 8, or 12 days in a row, and so forth.
Fair dismissals due to misconduct require 4 such instances to terminate the employee from the company. However, an employer may not terminate the employee in the following scenarios:
- If the employee is on maternity leave
- If the employee is pregnant
- If an employee is on unpaid leave to look after the child
- If an employee is serving in actual military service
- Pension: To reap the benefits of social security, an employee must register with the National Fund of Morocco, which is also known as the Caisse National de Securite Sociale. As per the law, all employees are bound to participate in the program. The retirement age in the country was set to 63 years in 2015 by Abdelilah Benkirane.
- Work Hour Norms: Employees who work in fields of commerce, liberal profession, or other industry shall not work past the standard working limit of 44 hours per week. Those employed in an agricultural domain have a standard working time limit of 2496 hours per calendar year. A rest period of a minimum of 24 hours is mandatory from midnight till midnight on Sunday, Saturday, Friday, or the regional weekly-market days in rural areas.
How easy is it to conduct business in Morocco?
According to the Doing Business report 2020 prepared by the World Bank, Morocco ranked at 53rd position among 190 countries in the Ease of Doing Business (EODB) Index and scored 73.4 out of 100. The EODB rank of a particular economy is determined by the Doing Business, which analyzes various elements that play a role in rendering the process of business establishment easy or challenging. Some of these factors are managing construction permits, getting electricity, enforcing contracts, resolving insolvency, etc. After estimating the economy’s rank on these individual indicators, the Doing Business gauges an overall EODB position in the country. The higher the position of a country in the EODB index, the smoother it is to launch a venture in the country. Let’s know the sub-index rankings of Morocco as evaluated by the Doing Business in 2020. Read on!
- Starting a Business: The Doing Business indicator is evaluated to understand the cost, procedures, time, and formalities involved in starting a business in a country. For instance, it measures how much paid-in minimum share capital one has to deposit when launching a business in a specific country. Morocco got 43rd position among 190 countries and scored 93 out of 100 on this indicator. In 2013, the country did away with the minimum capital requirement needed to set up a limited liability company, thereby rendering the process easier.
- Managing Permits: To operate a business legally, you need to procure foundational permits and licenses to carry out the activities your business aspires to specialize in. The requirements of permits vary from business to business. For instance, permit and license requirements of an alcohol or beverage business would be different from those needed in a travel and tourism business. The Doing Business gauges the time, formalities, and cost it takes to grab permits, as well as it also measures the strength and efficiency of the construction permitting system. Morocco was ranked at 16th position among 190 countries and scored 83.2 out of 100. In 2008, the country adopted a one-stop-shop to reduce the time needed for permit applications, thereby rendering the process easier.
- Getting Electricity: Electricity is indispensable in households as well as businesses. You can’t expect a business to move a smidgen without this lifeline element. This makes getting electricity a potential EODB rank indicator, and thus, the Doing Business evaluates the time, cost, formalities, and other procedures involved in acquiring a connection with the electricity grid in the country. On top of that, it also assesses the tariff transparency and reliability of the electricity supply in the country. Morocco was ranked at 34th position among 190 countries and scored 87.3 out of 100, according to the Doing Business report 2020. In 2016, the country lowered the time the process of getting an electricity connection entailed by offering lesser fees and more rapidly.
- Getting Credit: Businesses need credit to expand their reach, meet the overheads and other expenses of operations, recruit employees and needed staff, and so forth. How easily a business can procure credit in a country is what the Doing Businesses strive to reckon by measuring the time, cost, and procedures involved in the process. Furthermore, it also probes into the efficiency and strength of credit reporting systems and movable collateral laws. Morocco got 119th rank in this sub-index and scored 45 out of 100 among 190 countries that are compared. In 2009, the access to credit information was enhanced. This was accomplished by assuring the rights of borrowers to evaluate their own data in the public credit registry.
- Managing Payroll: Your responsibility increases manifold as your workforce and staff count rise. You have a bigger payroll to manage, taxes to consider, and other reimbursements to regulate. It is surely not viable to leave all your job of managing your business as its head and sit to manage the payroll of employees. Instead, the best and most productive approach is to consider the payroll management services of Zimyo and incorporate them into your organization. This would facilitate you not only in making timely payments to your staff and employee but also in reimbursing taxes and abiding by different taxation laws.
- Paying Taxes: Businesses that are eligible to pay taxes must go through different procedures before, during, and after filing taxes. The Doing Business evaluates the formalities, procedures, cost, and time the process of paying taxes in a particular country entails. Morocco got 24th rank among 190 countries and scored 87.2 out of 100, according to the Doing Business report 2020. In 2012, the country enhanced the online corporate tax and VAT filing and payment system, thereby easing the administrative burden involved in the process.
- Enforcing Contracts: Enforcing Contracts make another potential indicator of the business enabling environment of a country. To estimate the strength of this factor, the Doing Business checks the time, cost, result, and recovery rate for a system to resolve a commercial dispute. Morocco bagged the 60th position among 190 countries and scored 63.7 out of 100, according to the Doing Business report 2020. In 2020, the country adopted an automated setup that arbitrarily assigns insolvency cases to judges. Furthermore, it also started to publish court measurement performance reports in the cases, thereby rendering the process easier.
- Resolving Insolvency: Resolving Insolvency is a sub-index where the Doing Business measures the time, cost, formalities, and other procedures involved in tackling and recovering from commercial insolvency. Doing business also evaluates the efficiency and strength of legal systems and court laws and regulations in resolving insolvency cases. Morocco got the 73rd rank out of 190 countries and scored 2.9 out of 100, according to the Doing Business report 2020. In 2019, the country encouraged the continuation of the business of a debtor during insolvency court proceedings and supported initiation proceedings, thus, making the process easier. Furthermore, creditors were enabled higher participation in insolvency proceedings and made them more accessible to them.
Morocco’s one of the most developed advanced markets in Africa, world-class infrastructure, young, skilled, and active labor force, and more such factors render it an alluring opportunities for start-ups to base a venture here. The sectors that are enjoying the most growth and scope in Morocco today are textiles, construction work, para chemicals and chemicals, agro-business, aerospace, offshoring business, and more. You can proceed with your decision to locate your business in Morocco without jitters!
Zimyo is a leading HR and Payroll management services provider in Morocco with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.