Corporate Governance Framework

Morocco has embarked since the 1990’s on a string of economic liberalization reforms. These efforts were rewarded in 2011 when the country was raised to investment grade category; specifically, in 2017 it is rated BBB by Standard & Poor’s and Fitch and Ba1 by Moody’s. The Casablanca stock exchange being the fourth largest in Africa after those of South Africa, Nigeria and Egypt; and its current level of market capitalization at USD 60 billion includes 75 companies. The main index Masi was downgraded to “frontier market” due to a lack of liquidity in the market. But 2016 witnessed major shifts; the Casablanca stock exchange completed its demutualization process and the state-owned port operator Marsa Maroc listed 40% of its stake in an initial public offering. Ownership structure of listed companies is concentrated with family groups and institutional investors dominating the market, unlike other Middle Eastern markets which are more retail driven.  

The first Moroccan code of good corporate governance practices was published in 2008, as a result of a complex and successful bargaining process between public, private and civil society actors, which gathered in 2007 in the National Commission for Corporate Governance. Two Specific codes on SMEs and family-owned enterprises; and on banks were respectively issued in the form of annexes to the first general Code, in 2009 and 2010. In March 2012, the Code of governance of state-owned enterprises was published.

Codes are implemented on a voluntary “comply or explain” approach. Banks and financial institutions are regulated by the Central Bank, which strictly monitors implementation of rules and directives on corporate governance and internal control.

The country has recently reformed regulatory and legal frameworks governing capital markets, to increase independence and supervisory powers of the capital market authority (AMMC) which will oversee all transactions on financial instruments (its scope was limited to securities). The Market authority supervisory powers include oversight of the Casablanca Stock Exchange, the central depositor and all securities market intermediaries, and ensure enforcement of disclosure rules of information to the public, among other regulations.

Morocco is one of the few African countries to have a local chapter of the Institute of Internal Auditors and its Institute of Directors (IMA) has been providing certificate training program for board members and aspiring board members since 2013, accounting today for more than 100 certified directors. 

Board composition and functioning

The joint stock company law 17-95 provides for both structures (one tier and two-tier board). In the one-tier system, the role of executive officer and chairman of the board can be combined or dissociated.

All board members should own at least one share. The joint stock company law amended in July 2015 requires that all audit committee members shall be independent and that the board be composed of at least two thirds of non-executive directors. The Central Bank amended the banking law and its corporate governance directive in 2014 and requires that at least one and up to a third of independent directors shall be appointed to the board. 

It is mandatory to establish an audit committee in banks and financial institutions, as well as in listed companies.

Protection of shareholders

Basic rights of shareholders (secure method of ownership registration, transfer shares, participation in vote in general shareholders meetings, timely payments of dividends; etc), are addressed.

Shareholders enjoy pre-emptive rights in case of capital increase.

Shareholders representing 10% of the share capital are entitled to call a general meeting for shareholders and the threshold to place items on the general shareholders assembly is 5% of capital.

Voting by proxy is provided for by law. Voting by post and electronic equally, subject to provisions in the Articles of Association. Shareholders may file a direct or derivative suit against the company’s directors or managers for compensation of any losses. Commercial courts in Morocco mediate corporate governance related disputes.

There is no regulation addressing whistleblowing.

Disclosure and transparency

The stock exchange’s website makes available ownership structure and financial information of listed companies, including annual financial statements, auditors’ reports, and financial activities indicators.

Companies are required to fully disclose related-party transactions in their financial statements. Related party transactions are subject to prior approval of the board. The chairman must inform the auditors, who prepare a special report to be submitted for the approval of the general meeting for shareholders.

The use of IFRS is required for listed companies and private debt issuers when they publish consolidated financial statements, and is mandatory for banks and financial institutions.

Disclosure of non-financial information is voluntary.

Companies are required to have their financial statements audited by an independent auditor, appointed by the general meeting for shareholders. Listed companies and banks are required to appoint two external auditors.

Information on board directors and key executives compensation is systematically disclosed at an aggregate level by banks, but there is no obligation to disclose it for listed companies.