Joint Ventures Morocco | Partnership Structures & Governance

By Zakaria Korte, Korte Law in association with Amereller

Joint Ventures and Partnership Structures in Morocco

Morocco continues to attract strategic investment across sectors such as manufacturing, renewable energy, infrastructure, financial services, and technology. Joint ventures are frequently chosen to combine local market knowledge with capital, technology, or distribution capacity. This article provides a practical, practitioner-focused overview of Moroccan joint venture options and structuring considerations, including corporate and contractual vehicles, governance and minority protections, capital contributions and profit sharing, exit mechanics, regulatory overlays, intellectual property considerations, dispute resolution, and practical tips for implementation.

Overview of Joint Venture Options in Morocco

Moroccan law supports a spectrum of joint venture models that can be adapted to the project’s risk profile, time horizon, governance needs, and sector-specific regulatory constraints. Broadly, parties choose between a corporate joint venture—where a new company is formed and jointly owned—or a contractual arrangement that binds the parties without creating a separate legal entity.

Corporate joint ventures typically use the société anonyme (SA) or the société à responsabilité limitée (SARL). These forms are familiar to investors, allow tailored governance frameworks, and can accommodate a range of capital structures. Contractual joint ventures are used for time-limited or project-based collaborations, notably the groupement d’intérêt économique (GIE) and the consortium or groupement momentané d’entreprises (GME). Each model carries different implications for liability, funding, control, regulatory treatment, tax, and exit.

Corporate Joint Ventures

Selecting the JV Company Form: SA vs. SARL

The two most common corporate vehicles are the SA and the SARL. The SA is well-suited for larger or capital-intensive ventures, especially where future financing rounds, complex share classes, or potential capital markets options are contemplated. Governance flexibility exists between a single-tier board of directors or a dual structure with a management board and a supervisory board. The SARL offers a simpler, more closely held form with one or more managers (gérants), lower corporate formalities, and restrictions on share transfers to non-partners that can align with a “club deal” dynamic.

In practice, the choice turns on scale, investor profile and sophistication, anticipated financing and exit pathways, and the level of bespoke governance rights required. Where the investor group includes financial sponsors, strategic partners, and potential future entrants, the SA’s corporate plumbing can be attractive. For bilateral or small club ventures focused on operations rather than fundraising, the SARL’s simplicity often prevails.

Governance and Management Control

Corporate governance is typically split between statutory organs (board or managers) and contractual arrangements in a shareholders’ agreement. Moroccan law provides baseline rules, but investors nearly always supplement them with detailed governance protocols.

Board or managerial composition is aligned with ownership but calibrated for control of day-to-day operations versus strategic decisions. A majority shareholder may control ordinary management, while supermajority or veto rights protect key strategic matters.
Reserved matters typically include changes to capital, entry/exit of shareholders, significant M&A or asset sales, indebtedness and security, business plan and annual budget approval, related-party transactions, auditor appointment, distributions, and liquidation.
Information rights and reporting cadence are documented, along with the approval thresholds and meeting procedures. Quorum and casting vote mechanics are calibrated to avoid deadlocks without undermining minority protections.
Management incentive plans are frequently carved out where management participation is expected. Clear alignment between the bylaws and the shareholders’ agreement is essential to preserve enforceability and avoid internal contradictions.

Capital Contributions and Profit Sharing

Capitalization can be by way of cash, in-kind contributions (e.g., equipment, contracts, intellectual property), or a mix. In-kind contributions in an SA generally require a contribution auditor to value the assets. In a SARL, in-kind contributions may also trigger valuation formalities depending on the circumstances and should be assessed early. It is common to combine paid-in capital with shareholder loans to optimize tax efficiency and cash flows. Intercompany financing terms must address interest, subordination, amortization, and prepayment.

Profit distribution policies are typically tied to audited results, debt covenants, and reinvestment needs. Shareholders often agree on a distribution waterfall and priorities between dividends and repayment of shareholder loans. Anti-leakage protections (e.g., no extraordinary payments or related-party transfers without consent) are used to preserve value and ensure alignment with the agreed plan.

Minority Protection

Minority investors seek tailored protections without paralyzing the JV. Well-structured protections include:

Veto rights over specified reserved matters and clear supermajority thresholds.
Board representation, information rights, and access to records and facilities.
Pre-emption rights on new issuances, anti-dilution protections, and restrictions on transfers to competitors.
Dividend policy commitments, budget adherence covenants, and restrictions on indebtedness or material asset disposals.
Tailored deadlock resolution mechanisms and exit rights described below.

The key is proportionate protection. Overly broad vetoes can impede operations and trigger value-destructive stalemates. Clearly defined scopes, timelines, and escalation steps help contain friction.

Contractual Joint Ventures

GIE (Groupement d’Intérêt Économique)

A GIE is a flexible, non-capitalized grouping enabling companies to pool certain functions or resources, without necessarily seeking profits for the GIE itself. Members remain separate legal entities and typically share certain costs, infrastructure, services, or procurement. The GIE’s liability regime and internal rules must be drafted with precision, as members can face joint or several liability toward third parties depending on the configuration and undertakings assumed by the GIE. Governance is set by the founding agreement and internal regulations, with appointment of one or more managers.

A GIE is effective for back-office, logistics, purchasing, or R&D cooperation. It is less suited for revenue-generating operating ventures unless supplemented by robust intercompany contracts allocating risk, revenue, and IP.

Consortia and GMEs (Groupements Momentanés d’Entreprises)

Consortia or GMEs are commonly used for project-based collaborations, especially in public procurement or EPC-type projects. They enable multiple parties to bid and perform together, delineating each participant’s scope, pricing, and risk allocation. Authorities may require joint and several liability, necessitating comprehensive back-to-back arrangements among members, including performance and payment guarantees, penalties, and step-in rights.

Consortium agreements should address governance (steering committee and project manager), work allocation and changes, cash management, insurances, indemnities and limitation of liability caps, variations and change orders, force majeure, unforeseen conditions, and termination for default or convenience. Carefully drafted dispute resolution and escalation clauses are critical given tight project timelines.

Contractual vs. Corporate JV: Key Trade-offs

Liability exposure can be higher in contractual models unless carefully ring-fenced; corporate vehicles provide limited liability.
Tax treatment may differ, including permanent establishment risk and withholding taxes on intercompany flows.
Governance is more bespoke in contractual JVs but can be harder to enforce against third parties; corporate JVs benefit from company law defaults and registries.
Exit is typically easier to manage in corporate JVs through share transfers, while contractual JVs require novation or termination mechanics.

Exit Mechanisms and Deadlock Resolution

Transfer and Liquidity Provisions

Corporate JVs rely on share transfer rules and contractual rights to provide liquidity and manage changes in control:

Tag-along rights allow minorities to sell alongside a majority at the same price and terms.
Drag-along rights allow a majority to compel a minority to sell to a third-party buyer under agreed conditions, often with fair price protections.
Pre-emption and rights of first refusal/offer preserve incumbent ownership and price discipline for internal transfers.
Put and call options provide bilateral or unilateral exits on specified triggers (e.g., change in control of a shareholder, material breach, deadlock, non-achievement of milestones). Pricing mechanics often rely on agreed formulas, external valuation, or combinations with floors and caps, alongside funding and closing timelines.
IPO or trade sale routes require preparatory covenants on corporate housekeeping, financial controls, and exclusivity processes.

Deadlock Management

Deadlocks are addressed through tiered mechanisms: negotiation between representatives, escalation to senior executives, independent expert determinations for technical or financial issues, and ultimately buy-sell tools such as Russian roulette, Texas shoot-out, or sealed-bid auctions. For operational continuity, some JV agreements include interim decision rules or temporary casting votes limited to clearly defined categories (e.g., urgent compliance or safety matters), while preserving minority rights on strategic issues.

Regulatory Approvals and Public Law Considerations

Merger Control and Competition Compliance

Transactions that meet Moroccan concentration thresholds must be notified to the Competition Council before implementation. Early assessment is essential to avoid gun-jumping risk and to align long-stop dates and pre-closing covenants. Where the JV is full-function and independent, scrutiny resembles a standard merger review. Even if no filing is required, the JV should incorporate robust antitrust compliance, including clean teams and protocols for competitively sensitive information.

Sectoral and Foreign Investment Oversight

Morocco generally welcomes foreign investment, but regulated sectors—such as banking, insurance, telecommunications, energy, and natural resources—may require sectoral authorizations or fit-and-proper assessments. In public procurement contexts, consortia must comply with bid rules and qualification criteria, which may shape the JV’s composition and liabilities. Restrictions on ownership of agricultural land by foreigners, among other sector-specific rules, should also be assessed.

From a foreign exchange perspective, Morocco’s convertibility regime allows non-resident investors to repatriate dividends and capital gains provided the investment is made in foreign currency through authorized intermediaries and properly registered. JV documentation should align with banking requirements to ensure seamless distribution and exit payments. Royalty and service fee payments to non-residents may require supporting documentation and are often subject to withholding tax; careful planning is recommended to avoid cash traps.

Public Law, Permits, and Compliance Overlay

Project-driven JVs must map permits, licenses, and environmental and social impact assessments at the outset, allocating responsibility and timelines. Public-private partnerships or concessions include bespoke public law obligations, performance bonds, renewal and step-in rights, and change-in-law protections. Data protection, health and safety, and anti-corruption compliance programs should be embedded; joint ventures involving personal data processing must align with Moroccan data protection requirements, including any necessary notifications to the competent authority.

Intellectual Property Contributions and Technology Transfers

Structuring IP Contributions

JV platforms often rely on contributed or licensed IP, know-how, and software. Key drafting issues include:

Clear distinction between background IP (pre-existing) and foreground IP (developed under the JV). Ownership of foreground IP can be assigned to the JV or co-owned with detailed exploitation rights.
Scope, territory, exclusivity, and field-of-use restrictions for licenses to the JV; sublicensing rights to affiliates or subcontractors to facilitate operations.
Royalties, milestone, and maintenance fee structures aligned with foreign exchange and tax rules, with robust transfer pricing support.
Registration of IP assignments or licenses as required to ensure enforceability toward third parties. Moroccan industrial property is administered locally, and filings should be diarized to avoid gaps.
Source code escrow, cyber security, and data governance measures where software or platforms are critical assets.

Protecting Confidential Information and Trade Secrets

Comprehensive confidentiality, non-use, and non-circumvention clauses are essential, together with protocols for clean teams during pre-closing diligence. Post-termination obligations must protect contributed IP and prevent unfair competition, while allowing the departing party to continue its independent business where appropriate.

Dispute Resolution: Moroccan and International Options

Moroccan law supports arbitration and mediation for commercial disputes, and Morocco is a party to the New York Convention, facilitating cross-border enforcement of arbitral awards. Parties commonly choose between:

Moroccan-seated arbitration under institutional rules, with proceedings in French, Arabic, or English as appropriate, particularly for domestic projects or where enforcement in Morocco is anticipated.
International arbitration seated in a neutral venue for cross-border ventures, with choice of governing law and language tailored to the investor mix.
Expert determination for technical or accounting disputes, complementing broader arbitration provisions.
Step clauses mandating good-faith negotiation and mediation before arbitration to preserve relationships and expedite resolution.

Dispute resolution clauses should also address interim relief, emergency arbitration, confidentiality, consolidation or joinder of affiliates, and appointment mechanics. Aligning the forum with likely enforcement jurisdictions and asset locations is a core strategic consideration.

Tax and Accounting Considerations

Tax analysis should be integrated at term sheet stage. Considerations include:

Corporate income tax exposure of the JV company, deductibility of interest, thin capitalization limits, and the treatment of shareholder loans.
Withholding taxes on dividends, interest, royalties, and services, with treaty relief where available and supported by documentation.
VAT treatment of intercompany supplies, cost-sharing arrangements, and import VAT for equipment.
Transfer pricing policies and documentation for related-party transactions, including management fees, IP royalties, and procurement services, to withstand scrutiny.
Permanent establishment risk for contractual JVs or foreign partners’ personnel on the ground.
Use of special regimes or zones, where applicable, consistent with substance, governance, and operational realities.

Accounting policies, auditing requirements, and financial reporting calendars should be agreed early to underpin distribution tests and covenants.

Employment, Compliance, and Operational Matters

Workforce planning should address secondments versus hires, co-employment risks, social security and payroll obligations, and employee IP assignment and confidentiality agreements. Where personnel are shared across consortium members, careful documentation of direction and control reduces risk. Compliance frameworks should include anti-bribery, sanctions, data protection, and ESG policies proportionate to the sector and counterparties. Insurance programs—property damage, business interruption, public liability, professional indemnity, and project-specific cover—are typically centralized at the JV level with back-to-back obligations on shareholders.

Practical Recommendations for Structuring and Executing JVs

Early Planning and Term Sheet Discipline

Invest time in a detailed term sheet capturing contributions, governance, reserved matters, financing strategy, exit rights, and dispute mechanisms. Early clarity on sectoral approvals, merger control, foreign exchange treatment, and tax outcomes prevents re-trades. Align the bylaws with the shareholders’ agreement to avoid enforceability gaps.

Fit-for-Purpose Vehicle and Ring-Fencing

Select a vehicle that fits the risk and duration of the project. Use a corporate JV to limit liability where third-party contracts are significant; deploy consortia or a GIE for limited-scope cooperation or bidding alliances, with robust back-to-back arrangements to manage joint and several liabilities.

Calibrated Control and Minority Protections

Design governance that allows management to operate within an approved budget and plan while reserving strategic changes for enhanced approvals. Limit vetoes to clearly defined, high-impact matters. Ensure board composition, information flows, and audit rights are commensurate with the capital at risk.

Funding Stack and Distribution Logic

Blend equity and shareholder debt to balance tax and cash needs. Establish distribution metrics tied to audited results and debt service, with anti-leakage protections. Ensure any upstream payments to foreign shareholders fit within banking and foreign exchange rules.

IP and Data: Own What Matters, License What You Must

Define background and foreground IP with precision. Protect trade secrets and ensure that licensing and assignment mechanics are documented and registrable. Build data governance, cybersecurity, and escrow measures proportionate to the operational reliance on digital assets.

Clean Antitrust Execution

Assess merger control early and implement clean teams for competitively sensitive information. Avoid gun-jumping through carefully crafted interim operating covenants and standstill obligations until closing.

Exit-Ready from Day One

Document clear transfer restrictions, tag/drag rights, and puts/calls with workable valuation and funding terms. Bake in deadlock pathways that prioritize value preservation. Maintain corporate housekeeping, audited accounts, and data rooms to keep strategic options open.

Project Contracts and Back-to-Back Protections

For consortia and public procurement, align JV and project documents to avoid liability gaps. Document variation, change order, and claims management protocols. Ensure insurances, guarantees, and indemnities are mirrored among participants.

Brief Conclusion

Morocco offers a robust and adaptable legal framework for joint ventures, spanning corporate vehicles like SAs and SARLs and contractual models such as GIEs and GMEs. Successful ventures pair the right structure with proportionate governance, calibrated funding and distribution terms, enforceable IP arrangements, and clear exit and dispute resolution pathways. Early regulatory, tax, and foreign exchange planning—combined with disciplined drafting—positions JV partners to execute efficiently, manage risk, and deliver durable value in the Moroccan market.

For expert guidance, contact Korte Law.