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COVID-19 Pandemic: Morocco’s Financial Regulations Update

As the world continues to battle the COVID-19 pandemic, Morocco has made significant updates to its financial regulations to ensure a smoother flow of transactions and investments.

Insurance Industry Updates

The Minister of Finance and Privatisation has issued new guidelines regarding regulated assets that insurance companies can hold in representation of their technical reserves. The update allows for the inclusion of securities governed under foreign law, providing clarity on the capacity of insurance companies to subscribe to such securities.

Usury Laws

Morocco’s Banking Law No. 103-12 has been amended to fix the maximum amount of interest that may be charged by banks and financial institutions at 12.94% for the period from April 1, 2023 to March 31, 2024.

Disclosure Requirements

There are no specific rules or laws regarding disclosure of certain financial contracts, leaving room for transparency and clarity in transactions.

Tax Updates

The payment of principal is not subject to taxation, while interest payments paid overseas to non-resident lenders are subject to a withholding tax rate of 10%. However, this rate may be reduced or exempted under double taxation treaties.

Guarantees and Security

Moroccan law allows for the creation of various security interests over a wide range of assets. Foreign lenders can consider real estate, shares, receivables, and bank accounts as collateral. The country also recognizes personal guarantees and non-possessory pledges.

Floating Charges and Similar Security Interests

Unlike other countries, Morocco does not recognize floating charges or similar security interests. Instead, security arrangements are made with respect to each individual asset.

Downstream, Upstream, and Cross-Stream Guarantees

Moroccan law allows for downstream guarantees but restricts upstream and cross-stream guarantees, which must not impair the company’s corporate benefit or infringe statutory objects provisions.

Release of Typical Forms of Security

The release of security depends on the type of security granted. Pledges and cautionnements automatically lapse upon full satisfaction of secured liabilities, while non-possessory pledges require filing a release notice with the Registre National Electronique des Sûretés Mobilières.

Priority of Competing Security Interests

The priority of competing security interests is regulated by the DOC, which ranks privileges above other securities. Pledges confer on creditors the right to be paid from pledged assets in preference to all others.

As Morocco continues to navigate the COVID-19 pandemic, these updates aim to provide clarity and stability for investors and financial institutions alike.