The limited liability company (SARL) remains by far the most widely used corporate form among economic operators in Morocco, whether family-owned SMEs or subsidiaries of international groups. Until a recent reform of Law No. 5-96 on general partnerships (SNC), limited partnerships (SCS), partnerships limited by shares (SCA), limited liability companies (SARL) and joint ventures (société en participation), a legal void exposed these companies to a major operational risk: the impossibility of quickly replacing a manager (gérant) in the event the position became vacant, particularly following a death. Two amendments, to Articles 71 and 85 of Law 5-96, have now filled this gap. Westfield examines these developments, their practical consequences, and the points of vigilance they call for.
The problem identified: a legal void in the face of management vacancy
Before the reform, Article 71 of Law 5-96 strictly governed the conditions and formalities for convening general meetings (GMs) of SNCs, SCSs, SCAs, SARLs and joint ventures. This power was reserved exclusively to the manager: a shareholder could, at best, only ask the manager to convene the meeting, and, if the manager remained silent, apply to the president of the court, ruling in summary proceedings, to appoint an agent to carry out the convening.
This mechanism proved unworkable whenever the position of manager was simply vacant, particularly following a death. The procedure for judicial appointment of an agent, as drafted, only covered the case of an acting manager who refused or failed to convene the GM despite a formal request from shareholders. Where there was no manager at all, requests made to the president of the court were frequently rejected for lack of an explicit legal basis covering this scenario. Companies were then left, sometimes for several weeks, without any body empowered to sign contracts, represent the company before third parties or authorities, or manage day-to-day affairs.
The same issue arose even more acutely for the single-member SARL: under Article 76 of Law 5-96, Articles 71 to 74 do not apply to it. No provision therefore allowed, in the event of the death of the sole shareholder who also held the position of manager, for the continuity of the company or the updating of its bylaws to be organized.
What the reform of Article 71 changes: a derogatory meeting convocation in the event of a vacant position
Two bills, introduced by the parliamentary group of the National Rally of Independents (RNI) and presented to the House of Representatives by MP Zaina Id hali, were adopted unanimously to remedy this situation. The first amends Article 71 of Law 5-96 by adding a derogatory paragraph: by way of exception to the general provisions, any shareholder — or shareholders representing the portion of capital referred to in the fourth paragraph of Article 71 — may now, in the event the manager’s position becomes vacant for any reason whatsoever, directly convene a general meeting to appoint a new manager, without having to comply with the usual shareholding quotas or the fifteen-day notice period normally required.
This amendment was published in Official Gazette (Bulletin officiel) No. 7328 of 22 August 2024. It enables shareholders to react quickly: the new manager appointed under this procedure receives all the powers of their predecessor and can resume running the company’s affairs without interruption — signing contracts, managing banking and commercial relationships, and representing the company before third parties. The legislature’s clear objective is to prevent a management vacancy from paralyzing the business and exposing the company and its partners to legal and financial risk.
Article 85 and the continuity of the single-member SARL after the death of the manager
The second bill addresses the legal void specific to the single-member SARL. The last paragraph of Article 85 of Law 5-96 already provided that a company is not dissolved by the death of one of its shareholders, unless the bylaws provide otherwise — a classic continuity principle in company law. But, as noted above, this principle remained a dead letter for the single-member SARL when the sole shareholder, who is most often also the manager, died: no legal mechanism allowed a meeting to be convened to organize succession at the head of the company.
The reform now adds a paragraph to Article 85: in the event of the death of the sole shareholder, their heirs or successors in title may apply to the president of the competent court to appoint an agent responsible for convening a general meeting. The purpose of this meeting is to update the company’s bylaws — in particular to appoint a new manager and, where applicable, record the transfer of shares — within sixty days of the date of death.
This sixty-day period is an important point of attention for practitioners: it requires heirs, who are often still in the process of settling the estate, to act quickly to avoid any gap in the company’s governance.
Comparison: before and after the reform
| Situation | Previous regime | Regime resulting from the reform |
|---|---|---|
| Vacancy of the manager’s position (SNC, SCS, SCA, multi-member SARL) | Convening of the GM reserved to the manager; application to the president of the court only where the acting manager refused to convene, not in the event of a vacant position | Direct convening of the GM by shareholders, without complying with the usual quotas or the 15-day notice period, to appoint a new manager (amended Art. 71) |
| Death of the sole shareholder of a single-member SARL | No legal mechanism to organize continuity of the company or update the bylaws | Heirs/successors in title may ask the president of the court to appoint an agent to convene a GM to update the bylaws, within 60 days (amended Art. 85) |
| Powers of the newly appointed manager | N/A | The new manager receives all the powers of their predecessor, with no interruption in management |
Practical points of vigilance for companies and their shareholders
- Check that the company’s bylaws do not contain a contrary clause or internal convening procedure that would conflict with the new derogatory paragraph of Article 71.
- Anticipate, particularly in family-owned or single-member SARLs, a crisis-governance clause (appointment of an interim manager, shareholders’ agreement) to limit reliance on judicial proceedings, even simplified ones.
- In the event of the death of the sole shareholder, heirs must act diligently to meet the 60-day deadline set by the amended Article 85, failing which the company remains in a prolonged governance vacancy.
- Once the new manager has been appointed, complete the mandatory publicity formalities: filing with the commercial court registry, amendment of the trade register, publication in a legal notices journal and in the Official Gazette.
- Carefully document heir or successor-in-title status (certificate of inheritance, court ratification) before applying to the president of the court, to avoid procedural delay.
- Take the opportunity of this legislative development to review the bylaws of existing companies to ensure they are consistent with the new legal framework applicable to Articles 71 and 85 of Law 5-96.
A reform that is part of a broader modernization of Moroccan company law
These 2024 amendments extend a reform movement under way for several years in Morocco regarding the governance of commercial companies, notably including Laws 20-19 and 21-19, which respectively amended Law 17-95 on public limited companies and Law 5-96 on SARLs, adopted in 2019 to strengthen the accountability of management bodies and access to information for minority shareholders. The underlying trend is clear: to legally secure the continuity of Moroccan businesses, whether family-owned or structured as groups, in the face of the vagaries affecting directors and shareholders.
This article provides a general overview and does not constitute legal advice. Each situation involving a management vacancy or succession within a commercial company calls for a specific analysis of the bylaws, any shareholders’ agreement, and the family or capital context. Westfield regularly advises Moroccan companies and international groups on structuring their governance and managing these crisis situations; please do not hesitate to contact our business law team with any questions concerning your company.