The Ultimate Guide to Legal Due Diligence in Mergers and Acquisitions in Morocco

When a company considers a merger or acquisition in Morocco, the most critical step before signing is legal due diligence. This process goes beyond checking financial statements — it ensures that the target company is legally compliant, free from hidden liabilities, and properly structured under Moroccan law. 

Without due diligence, investors risk acquiring debts, lawsuits, or tax penalties. Morocco’s legal system, corporate rules, and labor laws are complex. A single overlooked CNSS liability or expired license can delay a deal or reduce its value. 

This guide explains how to conduct legal due diligence in Moroccan M&A transactions, with a step-by-step checklist, examples, and best practices. 

Why Legal Due Diligence Is Essential in Moroccan M&A 

• Protects buyers from hidden risks: unpaid taxes, undeclared employees, or legal disputes. 
• Supports accurate valuation: the real worth of a company depends on legal compliance.
• Strengthens negotiations: findings can justify price adjustments or demand warranties.
• Ensures regulatory compliance: M&A deals must respect Moroccan corporate and competition laws. 

Legal Framework in Morocco 

• Law 17-95: Governs public limited companies (SA). 
• Law 5-96: Governs limited liability companies (SARL). 
• Moroccan Commercial Code: Contracts, corporate structures, and business operations.
• Tax Code: Corporate tax (IS), VAT, and payroll taxes. 
• Labor Code: Employee rights and CNSS obligations. 
• Competition Law (Law 104-12): Ensures fair competition in mergers. 
• AMMC rules: Oversight of public M&A transactions involving listed companies.

Step-by-Step Legal Due Diligence in Moroccan M&A 

1. Corporate Documents 

• RC (Registre de Commerce) extract. 
• Updated statutes and bylaws. 
• Shareholder agreements and UBO declarations. 
• PV AGO/AGE (minutes of general meetings). 

Why important: Undocumented share transfers often cause disputes. 

2. Licensing & Regulatory Compliance 

• Verify sector-specific permits (banking, tourism, industry, telecom). 
• Environmental approvals (Law 12-03). 
• Foreign exchange approvals (Office des Changes). 

Red flag: Expired or missing licenses may invalidate operations. 

3. Contracts & Obligations 

• Supplier and client agreements. 
• Loan contracts with Moroccan banks. 
• Distribution or franchise agreements. 
• Joint venture or shareholder contracts. 

Tip: Always check arbitration clauses. Without them, disputes drag in Moroccan courts. 

4. Tax & Financial Compliance 

• Tax ID (IF). 
• VAT, CIT, and IT declarations (last 4 years). 
• Pending audits with tax authorities. 
• Tax clearance certificates.

Hidden risk: Companies often delay IS filings. Buyers inherit penalties. 

5. Labor & HR Review 

• CNSS registration. 
• Employee contracts and payroll records. 
• Minimum wage (SMIG/SMAG) compliance. 
• Pending labor disputes. 

Example: A factory with undeclared workers exposes the acquirer to retroactive CNSS contributions. 

6. Litigation & Disputes 

• Ongoing lawsuits (commercial, labor, tax). 
• Arbitration files. 
• Insolvency or bankruptcy risks. 

7. Intellectual Property & Assets 

• Registered trademarks and patents at OMPIC. 
• Property deeds and commercial leases. 
• Mortgages or liens.

Legal Due Diligence Checklist for M&A in Morocco 

• RC extract & OMPIC records 
• Updated statutes and shareholder registers 
• Sector licenses and approvals 
• Tax declarations (VAT, IS, IR) + certificates 
• CNSS compliance & payroll verification 
• Supplier & client contracts reviewed 
• IP rights confirmed with OMPIC 
• Real estate deeds & leases verified 
• Litigation history analyzed 

Case Studies 

Case 1: Acquisition of a Manufacturing SME

– Due diligence revealed unpaid CNSS contributions for 50 workers. Buyer renegotiated the deal, saving 20% on purchase price.

Case 2: Merger in Health Sector

– Missing license renewals discovered during legal audit. Regulatory compliance became a condition precedent for closing. 

Common Red Flags 

• Undeclared employees or underreported salaries. 
• Expired licenses in regulated industries. 
• Pending tax disputes. 
• Shareholder conflicts hidden from OMPIC records. 
• Lease contracts without notarization. 

Best Practices for M&A Due Diligence in Morocco 

• Engage bilingual legal experts familiar with French and Arabic law.
• Verify directly with authorities (OMPIC, CNSS, tax office). 
• Demand warranties & indemnities in the SPA (Share Purchase Agreement).
• Cross-check payroll, tax, and CNSS data for inconsistencies. 
• Prepare for cultural differences in negotiation and governance.

FAQs 

1. Is legal due diligence mandatory for M&A in Morocco? 

Not always, but it is highly recommended. For listed companies, AMMC requires disclosures. 

2. How long does it take? 

On average 4–8 weeks, depending on company size and sector. 

3. What are the biggest risks in Moroccan M&A? 

Tax liabilities, CNSS non-compliance, and hidden litigation. 

4. Do foreign investors need Moroccan advisors? 

Yes. Local counsel ensures compliance with Moroccan laws and avoids translation errors. 

Conclusion 

Legal due diligence in mergers and acquisitions in Morocco is your safeguard. It reveals risks, ensures compliance, and empowers investors to negotiate better deals.