Moroccan Securities Law and Investor Protection

The Moroccan financial landscape has undergone significant modernisation over the last decade, establishing itself as a leading regional hub for investment. Central to this growth is a robust legal framework designed to regulate credit institutions, manage financial instruments, and, most importantly, protect the interests of both domestic and international investors.

Understanding the legalities of securities and financial operations in Morocco is essential for any stakeholder looking to engage with the market. This article explores the primary legislative pillars that govern financial institutions, the role of regulatory bodies, and the specific protections afforded to those investing capital within the Kingdom.

The Regulatory Framework for Financial Institutions

The foundation of Moroccan financial stability lies in the regulation of credit institutions and similar bodies. Under Law No. 50.21 (which amended previous banking legislation), the Moroccan legislature has established a clear distinction between entities subject to general banking laws and those governed by specific statutes.

According to Article 23 of Law 50.21, certain entities are exempt from the standard credit institution regulations because they operate under their own specialised legal frameworks. These include:

• Bank Al-Maghrib: The central bank of Morocco.
• The General Treasury of the Kingdom (TGR).
• Insurance and Reinsurance Companies: These are governed by Law No. 17.99 (the Insurance Code).
• The Hassan II Fund for Economic and Social Development: Governed by Law No. 36.01.

For institutions that do fall under the scope of the securities and credit law, strict governance is required. Article 22 mandates that payment institutions must maintain internal control systems, risk management mechanisms, and appoint two statutory auditors to ensure transparency and accountability.

The Role of Bank Al-Maghrib and the Ministry of Finance

Investor protection in Morocco is enforced through a dual-layered supervisory approach involving the Central Bank (Bank Al-Maghrib) and the Ministry of Finance.

Under Article 108 of Law No. 42.12 regarding the futures market for financial instruments, Bank Al-Maghrib is tasked with monitoring the compliance of credit institutions. Its authority extends to supervising market management companies and clearinghouses. This ensures that the infrastructure of the Moroccan stock market and derivative markets operates with integrity.

Furthermore, Article 24 and 25 of Law 50.21 specify that the Governor of Bank Al-Maghrib issues circulars to implement financial laws. These circulars must be approved by the Minister of Finance and published in the Official Gazette (Bulletin Officiel) to be legally binding. This process ensures that financial regulations are not only technically sound but also carry the full weight of governmental oversight.

Guarantees and Protections for Foreign Investors

Morocco has implemented a "charter" approach to investment, providing specific legal guarantees to encourage the inflow of foreign capital. The Investment Charter (Framework Law) provides essential protections that mitigate the risks typically associated with cross-border investments.

1. The Right to Transfer Funds

One of the most critical protections for foreign investors is found in Article 31 of the Investment Charter. It guarantees both Moroccan nationals residing abroad and foreign investors (resident or non-resident) the freedom to:

• Transfer net profits without limits on amount or duration.
• Transfer the proceeds from the liquidation or sale of the investment, including any capital gains.

2. Intellectual Property and Confidentiality

Article 32 of the same Charter ensures that the intellectual property rights of investors are protected under current Moroccan legislation. Additionally, Article 33 imposes a strict duty of professional secrecy on any official involved in processing investment files, protecting the personal and proprietary data of the investor.

3. Dispute Resolution

In the event of a conflict between an investor and the Moroccan administration, Article 35 of Law No. 1.84 (regarding mining investments and general investment principles) points to established international mechanisms. Disputes may be settled via:

• Bilateral investment protection agreements between Morocco and the investor's home country.
• The Arab Investment Guarantee Corporation protocols.

Statistical Declarations and Market Transparency

To maintain the health of the national economy and ensure market transparency, Morocco requires detailed reporting of international financial movements. Law No. 19.06 governs statistical declarations for foreign exchange and the balance of payments.

Under Article 1 of this law, all commercial and financial operations between residents and non-residents, as well as capital movements between Morocco and abroad, must be declared. This data collection allows the state to monitor the "Global International Investment Position" of Morocco, ensuring that the market remains stable and that systemic risks are identified early.

Conclusion

The Moroccan legal system provides a comprehensive shield for investors through a combination of strict institutional oversight and liberal economic guarantees. By empowering Bank Al-Maghrib to supervise market actors and providing statutory guarantees for the repatriation of profits, Morocco has created a predictable and secure environment for capital. For investors, the key takeaways are the importance of complying with statistical declaration requirements and the assurance that their property and transfer rights are protected by the highest levels of Moroccan law.

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