If you are considering a business transaction or joint venture in Morocco, the most important first step is to follow a structured due diligence checklist practical law in Morocco. This ensures you identify financial, legal, tax, and operational risks before signing any agreement. Without a proper due diligence process, investors and partners risk entering into deals that may expose them to hidden liabilities or regulatory issues.
In Morocco, due diligence is not only a best practice but also a legal and financial safeguard for both foreign and local businesses. Below, you will find a detailed, practical due diligence checklist that reflects Moroccan law and business practices.
Table of Contents
Why Due Diligence is Essential in Morocco
- Legal Compliance: Verify company formation, licenses, and regulatory compliance.
- Financial Transparency: Ensure the financial health of the target company.
- Tax Obligations: Review VAT, corporate tax, and social security compliance.
- Operational Risks: Assess supply chains, contracts, and employee status.
- Reputation: Understand the local context, potential disputes, or litigation history.
Due Diligence Checklist Practical Law in Morocco
1. Corporate and Legal
- Review company statutes (SARL, SA, etc.).
- Check registration at the Registre de Commerce.
- Verify shareholders, beneficial owners, and directors.
- Inspect board minutes, shareholder agreements, and prior amendments.
2. Financial and Accounting
- Audit last 3–5 years of financial statements.
- Review debt obligations and bank guarantees.
- Confirm accuracy of accounts receivable and payable.
- Identify any hidden liabilities.
3. Tax and Social Security
- Ensure compliance with Direction Générale des Impôts (DGI).
- Review VAT declarations and corporate tax payments.
- Check CNSS (social security) contributions for employees.
- Verify if there are pending audits or disputes with tax authorities.
4. Contracts and Operations
- Review major supplier and client contracts.
- Check lease agreements for offices, factories, or warehouses.
- Assess intellectual property registrations (brands, patents).
- Inspect ongoing litigation or arbitration cases.
5. Human Resources
- Confirm employment contracts are compliant with Moroccan labor law.
- Review payroll, severance obligations, and union agreements.
- Ensure compliance with Moroccan health & safety standards.
6. Regulatory and Sector-Specific Permits
- Import/export licenses (via PortNet and ONSSA).
- Environmental permits if applicable.
- Sector-specific authorizations (pharmaceuticals, food, finance, etc.).
FAQs about Due Diligence in Morocco
Q1: Do foreign investors need a Moroccan lawyer for due diligence?
Yes, it is strongly recommended. Local legal experts understand the complexities of Moroccan commercial, tax, and labor laws.
Q2: How long does the due diligence process take in Morocco?
Typically between 2 to 6 weeks depending on the size and complexity of the target company.
Q3: Can due diligence uncover hidden debts?
Yes. By analyzing contracts, bank guarantees, and pending litigations, investors can reveal obligations not listed in financial statements.
Q4: Is due diligence mandatory in Morocco?
While not always legally required, it is a critical step in mergers, acquisitions, and joint ventures to mitigate risk.
Final Thoughts
A due diligence checklist practical law in Morocco acts as a roadmap for investors and companies before making binding decisions. By following this structured process, you minimize risks, uncover hidden liabilities, and ensure your investment is compliant with Moroccan regulations.
Brahim Rami | Member of institute of chartered accountants in Morocco
He is a CPA and tax advisor, founder of NeoExpertise.net, a Legal and Tax firm helping foreign companies with business setup, due diligence, payroll, and tax compliance in Morocco and Africa.
