Dahir n° 1-15-106 of 12 Chaoual 1436 (July 29, 2015) concerning the promulgation of law n° 78-12, amending and completing law n° 17-95 on the ”sociétés anonymes” (or public limited corporations), has been published in the “Bulletin Officiel” n° 6390bis of August 28, 2015 (hereafter : the “Law”).
Awaited by practitioners for years, the Law modifies and completes the legal framework applicable to “sociétés anonymes” and in particular the rules applicable to publicly traded companies. The Law intends to simplify the regulation, to reinforce the transparency of information to minority shareholders and to improve internal governance processes. The main modifications brought forth by the Law are:
The Law imposes on publicly traded companies to establish an audit committee. Placed under the control of the administration board or of the supervisory board, this committee shall be in charge of all issues relating to the development and control of financial and accounting data. This may notably include: « (i) the follow-up of the development of information destined to shareholders, to the public and to the Moroccan Capital Market Authority (AMMC); (ii) monitoring efficiency of the internal control system, of the internal audit system and, where needed, the company’s risk management process; (iii) follow-up of the legal control of corporate and consolidated accounts; and (iv) the review and monitoring of statutory auditors’ independence, especially as regards the providing of complementary services to the controlled entity.»
The Law imposes on publicly traded companies to establish an audit committee. Placed under the control of the administration board or of the supervisory board, this committee shall be in charge of all issues relating to the development and control of financial and accounting data. This may notably include: « (i) the follow-up of the development of information destined to shareholders, to the public and to the Moroccan Capital Market Authority (AMMC); (ii) monitoring efficiency of the internal control system, of the internal audit system and, where needed, the company’s risk management process; (iii) follow-up of the legal control of corporate and consolidated accounts; and (iv) the review and monitoring of statutory auditors’ independence, especially as regards the providing of complementary services to the controlled entity.»
This committee is composed only of directors (or members of the supervisory board) who do not hold any other function within the company. The committee members must present sufficient financial or accounting credentials and they must show complete independence in accordance with the criteria specified and published by the aforementioned board, as per the terms established by the AMMC. »
The Law also intends to reinforce the shareholders’ right to information.
It consolidates the control system of related party agreements by imposing an information duty in regard to free agreements which, by virtue of their subject or their financial implications, are of significance to the parties involved (i.e., day-to-day operations agreed upon under regular market conditions) an obligatory duty. The list, containing the object and the conditions of these agreements shall be communicated by the president of the board (of directors or supervisory) to the members of the board (of directors or supervisory) and to the statutory auditor(s) within sixty days after the end of the fiscal year. Although the Law remains silent regarding the definition of the term « of significance », it is clear that any convention of important scale shall be notified to the board (of directors or supervisory); a measure which shall reinforce the protection of shareholders, minority in particular. Some may deplore the abandonment of the principle according to which « the concerned parties and the board of directors or the supervisory board shall ensure that the operations they conclude with the company are of equitable conditions »; this principle is now excluded from the text that was eventually enacted.
The Law establishes increased transparency for publicly traded companies, which must now have a website on which are published meeting notices and board reports in the event transactions with incidence on the capital are discussed.
In publicly traded companies, statutory auditors’ special report on related party agreements must be published under the conditions determined by the AMMC.
The Law also imposes on listed companies to subject an informing document on relating to any contemplated merger or split-up transaction to the AMMC for its approval (visa). This document shall be published under the form and conditions established by law n° 44-12, relating to the public offerings and the information required from legal persons and publicly traded entities. This amendment reinforces the obligation of information to shareholders, who will have more complete information regarding the reasons, modalities and consequences of these transactions, and who will be able to adjudicate them knowingly.
These companies’ bylaws shall now mention the information concerning the rights of each category of shareholders, more so in particular once the company issues shares containing particularities that may influence the functioning of the general assemblies (multiple voting shares or non-voting preferred shares, etc.).
Sep 5, 2015 | Corporate Law, Moroccan Law
