Financing a company’s growth often means reassuring a creditor, whether a bank, a supplier or an investor, about the security of repayment. In Morocco, that security largely rests on the law of secured transactions over movable assets, thoroughly modernised since the adoption of Law No. 21-18 on secured transactions and the launch of the National Electronic Registry of Secured Transactions (RNESM). Six years after it took effect, this reform continues to shape Moroccan companies’ access to bank financing, particularly for SMEs. Here is an overview of its concrete contributions and the points every executive or investor should be aware of.
A thoroughly modernised legal framework
Law No. 21-18 was published in Official Gazette No. 6771 (Arabic version) of 22 April 2019. It substantially amends the Dahir forming the Code of Obligations and Contracts (COC), in particular its provisions on pledges and charges, now grouped under a unified definition of “movable security” in new Article 1170 of the COC: an accessory real right created over a movable asset, or a set of movable assets, present or future, to guarantee the performance of an obligation, whether one’s own or that of a third party.
The implementing decree relating to the RNESM was published in the Official Gazette of 22 November 2020, but the registry has in fact been operational since 2 March 2020, under the responsibility of the Ministry of Justice. Its launch, just weeks before the lockdown linked to the state of health emergency, proved timely: it made it possible to digitise an entire set of formalities that had until then been carried out in person at the commercial registries.
The stated goal of the public authorities, echoed in particular by the National Committee for Business Environment (CNEA), is twofold: to facilitate companies’ access to bank financing, particularly for SMEs, by allowing them to pledge tangible and intangible movable assets as collateral, and to improve Morocco’s ranking on the “Getting Credit” indicator in international business climate reports.
The concrete contributions of the reform
The new regime is built around several structuring pillars.
Clarification and unification of concepts. The notions of pledge, charge and privilege are now harmonised around a single category of movable security, reducing the uncertainty that existed under the former regime, which was fragmented across several sector-specific texts.
Simplification of the creation of the security. Under new Article 1182 of the COC, a pledge or charge is perfected merely by drawing up a written instrument containing the required particulars, independent of any registration. Registration with the RNESM nonetheless remains essential to make the security enforceable against third parties, making it an unavoidable formality in practice, even though it is no longer a condition of validity between the parties.
Explicit recognition of quasi-securities. For the first time, the reform explicitly classifies certain transactions as “quasi-securities” assimilated to movable securities: assignment of receivables and factoring, sale with a retention-of-title clause, and finance leases. These transactions are now subject to the same rules on creation, publicity and enforcement as ordinary movable securities, which secures arrangements widely used to finance trade receivables or professional equipment.
Broader range of charges. The text establishes new charges suited to modern business life: charges over securities accounts, charges over bank accounts and charges over receivables, alongside the charge over a business (fonds de commerce) and the ordinary pledge.
Greater contractual freedom. Where the grantor of the security acts as a professional, new Article 1195 of the COC widens the scope for contractual negotiation between the parties, in particular regarding the terms of enforcement of the security.
Creation of the security agent. For the first time, the reform organises a regime for representing creditors who benefit from movable securities, through the role of security agent, whose scope of mission may be set contractually. This mechanism facilitates syndicated financing, where several creditors share the same security.
The RNESM: publicity, enforceability and public search
The National Electronic Registry of Secured Transactions, accessible online via the Ministry of Justice’s website, centralises the registration, amendment and cancellation of notices relating to all charges, with the notable exception of charges over certain equipment covered by Article 376 of Law No. 15-95 forming the Commercial Code, which remain subject to a separate publicity regime.
In practice, anyone can carry out a free public search in the registry to check whether a given movable asset is already subject to a registered security, making it a valuable due-diligence tool before any financing, acquisition of a business, or restructuring transaction. Filing a security notice, for its part, requires creating a user account on the platform and paying the service fees set by decree.
The table below summarises the main changes introduced by the reform compared with the previous regime.
| Aspect | Before Law 21-18 | Since Law 21-18 |
|---|---|---|
| Legal framework | Regimes scattered depending on the type of asset or security | Unified regime within the Code of Obligations and Contracts |
| Publicity of securities | Physical, often local registries (commercial registry) | Single national electronic registry (RNESM), searchable online |
| Quasi-securities (assignment of receivables, retention of title, finance leases) | Disparate legal regimes, uncertain legal security | Assimilated to movable securities, same rules on publicity and enforcement |
| Enforcement methods | Judicial sale, in principle the only ordinary route | Judicial sale, judicial attribution, forfeiture clause, non-judicial sale |
| Representation of creditors | No dedicated legal status | Security agent regime, useful for syndicated financing |
New, faster enforcement methods for creditors
One of the most significant contributions of the reform concerns the enforcement of securities in the event of debtor default. Under the former law, judicial sale of the pledged or charged asset was, in principle, the ordinary route, with the delays and uncertainties inherent in any contentious proceeding. Law 21-18 now adds three alternative methods: judicial attribution, whereby the court may award ownership of the asset to the creditor; the forfeiture clause (pacte commissoire), which allows the parties to agree contractually, from the creation of the security, that the creditor will become the owner of the asset upon default; and non-judicial sale, which permits a private sale of the asset without court involvement, subject to certain conditions.
These mechanisms significantly reduce recovery times for secured creditors, a decisive factor in how Moroccan banking institutions assess credit risk.
One particularity deserves mention for practitioners: new Article 1260 of the COC provides that a charge over a business (fonds de commerce) ranks after a pledge or charge created over one of the elements making up that business, regardless of the respective date of creation or enforceability of these securities. This ranking rule, which derogates from the usual principle of chronological priority, must be anticipated in any financing negotiation backed by a business.
Practical points of vigilance for companies
- Systematically register with the RNESM any security granted or received: without this formality, the security remains valid between the parties but unenforceable against third parties, exposing the creditor in the event of competition with other creditors.
- Carry out a public search with the RNESM before any acquisition of a business, taking of security, or financing transaction, in order to detect any prior securities encumbering the assets concerned.
- Carefully review forfeiture clause or non-judicial sale provisions in financing agreements: these mechanisms, now lawful, must be drafted precisely to be enforceable and effective when the time comes.
- Anticipate the specific ranking rule applicable to charges over a business, which may alter the actual order of priority among creditors.
- Consider using a security agent in financings involving several lenders, to simplify the collective management and enforcement of guarantees.
- Correctly characterise transactions involving assignment of receivables, factoring, finance leases or sale with retention of title, now subject to the quasi-security regime, with the resulting publicity obligations.
Conclusion
The secured transactions reform has given Morocco a modern legal framework, aligned with international standards, which in principle facilitates companies’ access to bank financing, particularly for SMEs. However, this modernisation comes with technical formalism, between RNESM publicity requirements, new enforcement methods and specific ranking rules, which calls for particular vigilance when negotiating and drafting security agreements.
This article presents a general overview and does not constitute legal advice. Each situation requires an individualised analysis of the facts and applicable texts. The Westfield law firm assists its clients, Moroccan companies and foreign investors, in structuring their financing and securing their movable securities. Please do not hesitate to contact our team with any questions regarding your situation.