The new Moroccan legal regime of free collective agreements in public limited companies: the introduction of an information obligation
If the problem of conflicts of interests transcends the different branches of law, companies law apprehends it through numerous and varied mechanisms.
Among the various mechanisms available through Law no. 17-95 on public limited companies, the procedure for regulated agreements, which finds its field of choice in this corporate form, constitutes an effective way to prevent an officer or a shareholder who seeks to privilege his own interests to the detriment of those of the company. For this purpose, the legislature implemented a distinction between regulated agreements subject to a particular control procedure and current agreements concluded under normal conditions not subject to any control. However, the legal framework for contesting conflicts of interest proved to be ineffective because of the difficulty of qualifying regulated agreements and ordinary agreements concluded under normal conditions. Management or shareholders are not always in a position to identify precisely the regulated agreements and ordinary agreements and may therefore exempt certain agreements that give rise to conflicts of interest in these procedures.
In order to strengthen the prevention of conflicts of interest, Act No. 78-12 amending Law 17-95 reformed the regime of the current conventions put in place previously. Specifically, the legislator has imposed an obligation on the person concerned (officer or shareholder) to inform of the chairman of the board of directors about said agreements.
In this sense, Article 57 of Law 78-12 provides that current agreements concluded under normal conditions, "except where such agreements are, because of their object or financial implications, not significant to either party, shall be communicated by the interested party to the chairman of the board of directors. A list comprising the subject matter and the conditions of said agreements shall be communicated by the chairman to the members of the board of directors and to the auditors within sixty days following the end of the financial year".
In addition, article 141 of the new law provides that the list of free collective agreements must now be made available to shareholders at least 15 days before the ordinary general meeting. It should be emphasized that the intervention of the Ordinary General Meeting differs from that provided for in Article 58 of Law No. 78-12 for regulated agreements which organizes the approval of agreements. The former is merely a measure of information allowing the shareholders to have a better legal and accounting visibility of said agreements.
While the new regime of current agreements has the merit of providing greater transparency in the functioning of the company and of providing better information and protection to shareholders, it is still lacking.
First of all, the absence of definition for the concepts of "current operations" and "normal conditions" makes it difficult to implement this new legal regime by the Chairman of the Board, who should be able to differentiate between types of operation and distinguish what constitutes a normal condition and what doesn’t. It seems judicious to advise the Chairman of the Board of Directors to control the agreements communicated to him and to refer the matter to the Board if it has any doubt about said agreements. This examination will make it possible to subject them to the procedure for supervising regulated agreements and take into account concerns about Chairman Liability.
Furthermore, we note that the legislator does not rule on the presence of the list of ordinary conventions in the annual special report of the auditor. The implementation decree of article 97 of law n° 78-12 regarding contents of the special report of the auditor will provide further clarifications.
The new regime of the current conventions partly meets the key objectives of the new law n°78-12, which include transparency, communication and information. However, it is feared that this new regime may not meet another objective of simplification. Carrying out disclosure and fulfilling disclosure requirements under the new legal regime could create a significant increase in corporate formalism given the significant number of agreements between executives or shareholders and the company.
For more information about the above development, please do not hesitate to contact:
Hatim Boukhris
[email protected]
