Mergers & Acquisitions in Morocco: Complete Legal Guide 2026 — Procedures, Due Diligence and Formalities

Mergers and acquisitions in Morocco do not rest on a single dedicated M&A code. Practitioners navigate between several texts that interact depending on the legal form of the target and the nature of the transaction. Law No. 17-95 on public limited companies, as amended by Law No. 20-05 and subsequently Law No. 78-12, forms the backbone of mergers involving SAs: it governs the approval procedure, the role of the merger auditor and the rights of minority shareholders. For SARLs, general partnerships (SNC) and limited partnerships, Law No. 5-96 applies — a far less detailed statute, which creates grey areas that contractual practice fills in.

The control of economic concentrations falls under a separate regime: Law No. 104-12 on freedom of pricing and competition, Articles 11 to 23 of which organise the mandatory notification procedure. This law is complemented by Law No. 20-13 relating to the Competition Council, which defines that institution's powers and independence. Decree No. 2-14-652 sets out the implementing rules. In practice, any transaction that crosses the turnover thresholds set out in Article 11 must be notified before it is completed — a point that many operators underestimate.

On the contractual side, the Dahir of 9 Ramadan 1331 forming the Code of Obligations and Contracts (DOC) governs the binding force of letters of intent, share purchase agreements and asset and liability warranties. Articles 230 et seq. on the promise of sale and Articles 52 and 224 on fraudulent concealment are regularly invoked in post-acquisition disputes. Moroccan law has no specific text on Anglo-Saxon-style representations and warranties, but the contractual freedom afforded by the DOC allows them to be validly stipulated.

Two special regimes deserve mention. The General Tax Code (CGI), in Articles 161 and 162, provides a tax-neutral regime for mergers meeting strict conditions — a major tax lever to anticipate from the structuring stage. Law No. 44-10 on Casablanca Finance City status may apply to cross-border transactions involving CFC entities, with specific tax advantages. For companies listed on the Casablanca Stock Exchange, public takeover or exchange offers are also governed by AMMC regulations.

Notification to the Competition Council is mandatory once the transaction simultaneously crosses two cumulative thresholds set out in Article 11 of Law No. 104-12. First threshold: the total worldwide consolidated turnover excluding tax of all undertakings concerned — seller, acquirer and targets — exceeds MAD 750 million. Second threshold: the total turnover excluding tax achieved individually in Morocco by at least two of the undertakings party to the transaction each exceeds MAD 250 million. Both conditions must be met simultaneously. Below these thresholds, no prior notification is required, but the Council retains the power to intervene on its own initiative in the event of harm to competition.

Notification must take place before the transaction is effectively completed — this is the standstill obligation: the definitive deed may not be signed until the Council has issued its decision or the statutory deadline has expired. The notification file follows a standard format defined by the Competition Council. It must include, in particular, a precise description of the transaction, information on the relevant markets affected, the market shares of the undertakings concerned, and an analysis of the expected competitive effects. An incomplete file suspends the review period: the Council requests additional information and the clock resets.

The Phase I review period is 60 working days from receipt of a complete file. At the end of this phase, the Council may authorise the transaction, authorise it subject to conditions (commitments by the parties), prohibit it, or open a Phase II in-depth investigation adding a further 90 working days. In practice, the vast majority of transactions are authorised at Phase I, but the timelines are real and must be built into the share purchase agreement from the outset through a condition precedent to obtaining authorisation.

The penalty for failure to notify is severe. Article 20 of Law No. 104-12 provides for a fine of up to 5% of the turnover excluding tax achieved in Morocco by the undertakings concerned. The Council may also order the parties to notify the transaction after the fact, to modify it or, in the most serious cases, to proceed with a divestiture. Since 2024, the Competition Council has been publishing more of its concentration decisions on its official website, enabling practitioners to identify emerging doctrine on the relevant markets recognised in Morocco — which helps anticipate the risk of a Phase II being opened.

Before the share purchase agreement itself, two preparatory documents structure the negotiation. The letter of intent (LOI or term sheet) sets out the broad terms of the agreement — indicative price, proposed structure, timeline — without in principle creating a definitive obligation. However, a LOI that is too specific on price, coupled with an exclusivity clause, may be recharacterised as a bilateral promise of sale by a court. Articles 230 et seq. of the DOC govern such promises. The confidentiality agreement (NDA) is signed simultaneously to protect information disclosed during due diligence — the DOC contains no specific provision on this point, but the contractual freedom afforded by Articles 401 et seq. is sufficient to give it full legal force.

The share purchase agreement — often referred to as a SPA in transactions involving foreign investors — is the central document. It must precisely identify the parties and the target company, and set out the price and its payment terms. An earn-out mechanism (a deferred price adjustment indexed to future performance) is recognised by Moroccan practice on the basis of contractual freedom, but its practical implementation can generate disputes if the calculation method is not meticulously defined. An escrow mechanism entrusted to a lawyer or notary is strongly recommended to secure payment.

Conditions precedent are the safety mechanism of any serious M&A transaction. The most common ones in Morocco are: obtaining Competition Council clearance, obtaining the acquirer's bank financing, obtaining SARL members' consent, and sometimes the renewal of a sector-specific administrative licence. Each condition precedent must include a clear longstop date beyond which the agreement lapses if the condition is not fulfilled. Article 107 of the DOC governs conditional obligations: if a condition is frustrated in bad faith by one of the parties, it is deemed to have been satisfied.

The asset and liability warranty (GAP) is the clause that generates the longest negotiations. It commits the seller to indemnifying the acquirer if an undisclosed liability materialises after closing. A well-structured GAP includes an indemnification cap (often 20 to 50% of the sale price), a basket (a threshold below which the acquirer bears the loss alone, often 1 to 2% of the price), a duration aligned with Moroccan limitation periods — four years for tax debts (Article 232 CGI) and five years for social security contributions — and a limited list of covered warranties. Without a cap and a basket, post-acquisition litigation is almost inevitable.

The tax neutrality regime provided for in Article 162 of the General Tax Code is the primary optimization lever in a merger. It allows the absorbing company to defer recognition of the latent capital gains on the contributed assets, subject to three cumulative conditions: the contribution must cover the entirety of the assets and liabilities of the absorbed company, the securities issued in exchange must be held for at least four years, and the absorbing company must undertake to calculate depreciation and any subsequent capital gains on disposal on the basis of the original tax values of the absorbed company. In the absence of this preferential regime, contribution capital gains would be immediately subject to corporate income tax (CIT) — a prohibitive cost for most transactions.

Registration duties on merger contributions also benefit from a reduced regime. Under the conditions of Article 127 read in conjunction with Article 162 of the General Tax Code, pure contributions (in exchange for securities) are exempt or subject to a fixed duty, while contributions made for consideration (assumption of liabilities) are subject to the 1% rate. This reduced rate is conditional upon compliance with the holding commitments: a premature divestment triggers a tax clawback with interest.

For a straightforward share transfer outside of a merger, registration duties amount to 3% of the market value of the unlisted shares or equity interests, levied on the value declared in the deed (Article 127-I-C of the General Tax Code). The Directorate General of Taxes (DGI) retains the right to audit this value: if the declared price appears to be below the actual market value, it may proceed with a reassessment. The transfer deed must be submitted for registration within 30 days of its date, regardless of the form of the transaction. Late submission gives rise to a penalty of 15% of the duties due (Article 208 of the General Tax Code), in addition to late-payment interest.

VAT on a transfer of a going concern is exempt where the purchaser continues the same activity — this is the continuity of business rule. However, if the purchaser changes the activity or if the transfer covers isolated assets without the transfer of a continuing activity, VAT may be assessed at the rate applicable to the assets transferred. This point is frequently overlooked when structuring carve-out transactions, where certain assets are extracted from an entity and sold separately. A prior tax consultation is essential in such arrangements to avoid an unpleasant surprise post-closing.

The most costly mistake I have observed across my files is undoubtedly the failure to notify the Competition Council. The parties — and sometimes their advisers — calculate the thresholds hastily and too quickly conclude that the transaction falls below them. The trap: the thresholds are calculated on consolidated worldwide turnover, not solely on the target's turnover in Morocco. A foreign group acquiring a small Moroccan company may very well trigger the MAD 750 million threshold on account of the acquirer's own size. Best practice: calculate the thresholds as soon as the LOI is signed, and if the slightest doubt remains, seek an informal opinion from the Competition Council before making any commitment.

Change-of-control clauses not detected during due diligence are another ticking time bomb. A commercial lease, a distribution agreement, a brand licence, or a public concession may contain a clause entitling the other party to terminate or renegotiate as soon as the shareholding changes. Such clauses are legally valid in Morocco (freedom of contract under the DOC) and their triggering post-closing may deprive the acquirer of essential assets. The solution: systematically map all material contracts during due diligence and obtain waivers before closing, or make them conditions precedent.

A representations and warranties agreement drafted without a cap, a threshold, or a time limit is a structuring error that generates recurring post-acquisition disputes. I have seen sellers remain exposed to unlimited claims for years because the share purchase agreement simply stated that the seller 'warrants the accuracy of the representations'. In practice, the cap is often negotiated at between 20% and 50% of the purchase price, the threshold at between 1% and 2% of the price, and the duration is aligned with Moroccan limitation periods: four years for tax liabilities (Article 232 of the General Tax Code) and five years for unpaid social security contributions. A retention mechanism (holdback) or partial escrow of the price is often more reliable than a representations and warranties agreement with no provisions.

Finally, the failure to inform employee representatives before a business transfer is a direct violation of Article 19 of the Labour Code that some acquirers underestimate — wrongly. Beyond labour tribunal sanctions, an employee who has not been informed in the prescribed manner may challenge the conditions of their transfer before the labour tribunal. In practice, the information and consultation meeting must take place before closing, minutes must be drawn up and signed, and the delegates must have had sufficient time to put forward their observations. This formality takes only a few days if planned in advance — but it can paralyse a transaction if overlooked.