Comparison of Legal Company Forms in Morocco — Law 5-96 Guide

Introduction: Law No. 5-96, the Foundation of Moroccan Company Law

Law No. 5-96 is the reference text governing the majority of corporate structures in Morocco. It specifically regulates the General Partnership (SNC), the Limited Partnership (SCS), the Partnership Limited by Shares (SCA), the Limited Liability Company (SARL) and the Joint Venture (SEP).

One fundamental principle unites these forms: SNC, SCS, SCA and SARL are commercial by virtue of their form, regardless of their corporate purpose, and only acquire legal personality upon registration in the Trade Register. The SEP, on the other hand, is a special case: it has no legal personality and is not intended to be known by third parties.

---

1.0 Synthesis and Comparison of Legal Forms

The comparison is based primarily on the nature of shareholders' liability, which determines the level of risk borne by founders.

---

2.0 Details on Legal Forms

2.1 General Partnership (SNC)

The SNC is a partnership characterized by strong *intuitu personae* and heavy liability.

Liability and Partner Status

All partners are merchants and are jointly and unlimitedly liable for corporate debts. Creditors can only pursue a partner after having unsuccessfully served notice on the company via an extrajudicial act.

Management

All partners are managers by default, unless the articles designate one or more managers, whether partners or not. Managers bind the company through acts falling within the corporate purpose.

Social Shares

Shares are nominative and their transfer requires the consent of all partners.

Dissolution

The company ends upon the death of a partner, unless the articles provide for continuation with heirs or surviving partners. Judicial liquidation or prohibition from practicing commerce against a partner also leads to dissolution, unless the other partners unanimously decide otherwise.

Account Approval

The management report, inventory and financial statements must be submitted for approval at the partners' meeting within six months of the close of the financial year.

---

2.2 Limited Partnership (SCS)

The SCS introduces a dual status between two categories of partners, with distinct liability regimes.

The two categories of partners and their contributions

> ⚠️ Essential rule: A silent partner who interferes in the management of the company — even for a single act — loses the benefit of their limited liability for acts committed during that interference. In serious cases, they may be held jointly and severally liable for all corporate debts incurred during their interference.

Applicable Rules

The rules applicable to SNCs apply to SCSs, subject to the specific rules of this type of company. In particular, majority rules and governance may be adapted by the articles for the silent partners' shares.

Management

Only general partners can be managers of the SCS. A silent partner designated as manager would automatically have their liability reclassified as unlimited and joint.

Share Transfer

Transfer of general partners' shares requires unanimous consent of all partners (general and silent). Transfer of silent partners' shares requires:

• Agreement of all general partners
• Majority in number and capital of the silent partners

The articles may, however, provide for more flexible rules for silent partners' shares (free transfer between partners or transfer to third parties subject to majority conditions).

---

2.3 Partnership Limited by Shares (SCA)

The SCA is a hybrid form combining the characteristics of a limited partnership and a joint-stock company, allowing capital to be opened to investors without granting them operational control.

Structure, Capital and Partners

Capital is divided into shares subscribed by silent partners. The minimum number of silent partners is 3. General partners have merchant status and are jointly and unlimitedly liable for corporate debts, while silent partners have shareholder status and only bear losses up to the amount of their contributions.

Applicable Rules

The SCA applies the rules of the SCS as well as, to the extent compatible, the provisions of Law No. 17-95 on Société Anonyme (SA), except for those concerning the administration and management of SAs.

Governance Bodies

• Manager(s): Appointed in the articles for the first managers, or by the ordinary AGM of the silent partner shareholders with the unanimous consent of the general partners for subsequent appointments. A silent partner cannot be a manager.
• Supervisory Board: Composed of at least three shareholders (silent partners), appointed by the ordinary AGM. A general partner cannot be a member of the supervisory board. This board monitors management and its approval may be required for important decisions listed in the articles.

Differences from SCS

---

2.4 Limited Liability Company (SARL)

The SARL is the most common legal form in Morocco — over 70% of new registrations — primarily due to the limited liability of its partners.

Liability and Incorporation

Partners only bear losses up to the amount of their contributions. The SARL may be incorporated by a single person (sole partner, then called SARLAU).

Share Capital and Partners

> ⚠️ Beyond 50 partners, the SARL must transform into a Société Anonyme (SA) within two years. Failing this, any partner may request judicial dissolution.

Legal Exclusions

Companies in banking, credit, investment, insurance, capitalization and savings cannot adopt the SARL form.

Industry Contributions

Industry contributions are generally prohibited in a SARL. However, they are authorized if the corporate purpose involves the operation of a business or an artisanal enterprise related to the corporate purpose.

Management

• The company is managed by one or more managers, natural persons only, whether partners or not.
• The manager is appointed in the articles or by separate deed (AGO by majority of shares).
• Removal requires just cause, otherwise the company is liable for damages.
• The manager is vested with the broadest powers to act on behalf of the company.

Share Transfer Legal Prohibitions

It is prohibited for managers or individual shareholder partners to:

• Take out loans from the company
• Obtain an overdraft on current account
• Have the company guarantee their commitments to third parties

Collective Decisions Statutory Auditor

A statutory auditor is mandatory if the SARL exceeds two of three thresholds: total balance sheet > MAD 50M, revenue > MAD 50M, headcount > 50 employees.

---

2.5 Joint Venture (SEP)

The SEP is a non-registered contractual structure, entirely atypical in the Moroccan legal landscape, used for one-off projects or discreet collaborations.

Fundamental Characteristics Internal Regime

Partners agree freely on its operation. If the company has a commercial character, relations between partners are governed by the rules applicable to SNCs, unless otherwise agreed between the partners.

Liability towards Third Parties

The SEP's liability regime is binary:

• If each partner contracts in their own name: they are solely liable towards third parties, without the latter being aware of the company's existence.
• If partners act ostensibly as partners (vis-à-vis third parties): they are held jointly and severally as general partners, with unlimited liability.

Practical Use

The SEP is often used for:

• Temporary joint ventures between professionals
• Real estate development projects (several co-developers)
• Contractual cooperation without intention to disclose

> ⚠️ Important (Finance Law 2026): Since January 1, 2026, SEPs comprising at least one legal entity or more than 5 individual partners are compulsorily subject to Corporate Tax (IS) in the name of the company. This measure puts an end to the tax opacity of large groupings.

---

3.0 Important Common Provisions

Certain general rules apply to all corporate forms governed by Law 5-96:

Disclosure and Legal Personality

Legal personality is acquired upon registration in the Trade Register. Disclosure formalities — including filing of deeds with the court registry and publication in a legal announcements journal and the Official Gazette — are mandatory. Failure to comply with these formalities may result in the nullity of the company or of the acts concerned.

Statutory Auditors (CAC)

The appointment of one or more statutory auditors is mandatory for SNCs, SCSs, SCAs, and SARLs whose turnover exceeds fifty million Moroccan dirhams excluding taxes at the close of the fiscal year. Even below this threshold, any partner may request the appointment of a statutory auditor from the president of the court sitting in summary proceedings.

Company Transformation

The regular transformation of a company into another legal form does not create a new legal entity. The applicable rules are:

Offences and Criminal Penalties

The law provides for criminal penalties for several types of offences:

• Distribution of fictitious dividends: managers may face criminal prosecution
• Misuse of corporate assets: using company property or credit for personal purposes
• Fraud in the valuation of non-cash contributions: deliberate overvaluation of contributions in kind
• Failure to file accounts: non-filing of financial statements within statutory deadlines
• Issuance of transferable securities by a SARL: managers of a SARL are liable to imprisonment and a fine if they issue transferable securities

> ⚠️ These sanctions aim to protect minority partners, creditors, and third parties from abuse by directors and majority partners.

---

4.0 In-Depth Comparative Table

4.1 Liability and Governance

3.2 Shares and Transfer

3.3 Dissolution and Continuity

---

5.0 Which Legal Form to Choose?

Practical recommendations

Decisive criteria

Liability is the first criterion:

• To protect your personal assets: SARL or SCA (silent partners)
• To engage your patrimony for commercial credibility: SNC or SCS (general partners)

Intuitu personae is the second criterion:

• If trust between partners is paramount: SNC (unanimity for transfer)
• If you want to open capital easily to investors: SCA

---

6.0 Common Obligations and Formation Formalities

Formation formalities (SNC, SCS, SCA, SARL)

> 💡 The SEP requires none of these formalities. It arises from a simple agreement between partners, without publication or registration.

Accounting and tax obligations

---

FAQ — Moroccan Legal Forms (Law 5-96)

❓ 1. What is the fundamental difference between SNC and SARL?

The fundamental difference lies in the nature of liability:

• In SNC, all partners are jointly and unlimitedly liable for the company's debts. This means creditors can pursue each partner for the full amount out of their personal assets.
• In SARL, each partner's liability is strictly limited to the amount of their contributions. Their personal assets are protected.

The SNC suits partnerships based on strong mutual trust and total personal commitment. The SARL suits projects where protecting partners' assets is a priority.

---

❓ 2. Can a silent partner in an SCS participate in management?

No. This is a fundamental legal prohibition of the SCS. A silent partner who interferes in company management — even for a single act — loses the benefit of their limited liability for acts committed during that interference. In serious cases, they may be held jointly and severally liable for all corporate debts.

The separation between general partners (managers, unlimited risk) and silent partners (investors, limited risk) is the raison d'être of the SCS.

---

❓ 3. What is the difference between SCS and SCA?

Both forms have a similar general partner / silent partner structure but differ on essential points:

The SCA is therefore better suited to large companies wishing to raise capital in the markets or have many passive investors, while keeping operational control in the hands of general partners.

---

❓ 4. Can a SARL be created with a single partner?

Yes. Moroccan law authorizes the creation of a Single-Partner SARL (SARLAU). In this case, the sole partner makes all decisions that would normally be made collectively (account approval, statutory modifications, etc.). There is no lower threshold: a single person can create a SARL with the minimum capital of MAD 10,000.

---

❓ 5. Is the SEP a real company in the legal sense?

The SEP is recognized as a company under Moroccan law (it is included in Law 5-96), but it is fundamentally different from other forms because:

• It has no legal personality: it cannot sign contracts in its own name or own property.
• It has no company name or sign visible to third parties.
• It is not registered in the Trade Register.

In practice, it is the partners who act in their own names, and third parties do not know that a company exists behind them. The SEP therefore functions primarily as an internal agreement between professionals.

---

❓ 6. What tax regime applies to each legal form?

---

Expert Advice from Accounting Services SARL

The choice of legal form is a foundational decision that commits the entrepreneur over the long term. Each form has its advantages and constraints, and the best choice depends on your personal situation, the nature of your activity, and your development ambitions.

Our firm, established in Tangier since 2003 with recognized expertise in Moroccan company law, supports you in:

• Comparative analysis of legal forms suited to your project
• Drafting articles of association compliant with Law 5-96 and best practices
• Complete management of formation formalities (OMPIC, DGI, Commercial Court)
• Tax advice on the appropriate tax regime (IS or IR)
• Post-incorporation support: accounting, tax returns, legal obligations

📞 +212 617177373 | 💬 WhatsApp available 7 days/7