Often reduced to a mere accounting entry, the shareholder’s current account (SCA) is, in practice, one of the most powerful internal financing instruments available to companies. It enables shareholders (whether founders or investors) to inject liquidity rapidly into the business without resorting to traditional bank financing and its associated constraints in terms of guarantees, procedures, and timing.

However, despite its apparent flexibility and informality, the shareholder’s current account is governed by a strict legal, tax, and financial framework. Its security does not depend solely on the reality of cash flows, but also on strict compliance with formal requirements. Failure to comply with these requirements may expose both the company and the shareholder to significant legal and tax risks.

A High Value-Added Treasury Management Tool

Recourse to a shareholder’s current account primarily responds to an operational treasury need. Unlike bank loans, which are often subject to the constitution of real guarantees (mortgages, pledges) and lengthy approval processes, advances made through a shareholder’s current account allow the company to meet its liquidity needs immediately.

From a financial standpoint, the SCA offers a high degree of flexibility. It allows shareholders to temporarily place their personal funds at the disposal of the company without altering the share capital or resorting to external financing. The amounts advanced therefore constitute an immediate source of liquidity intended to cover the company’s ongoing operational requirements.

From a wealth management perspective, the shareholder’s current account operates as a tool for financial arbitrage. The shareholder retains ownership of the advanced funds, which remain repayable in principle, subject to the company’s financial situation. At the same time, these advances may generate financial charges for the company, which can be deducted from its taxable income, provided that the strict conditions set out by Moroccan tax law are fully respected.

The Tax Lock: Interests, Deductibility Conditions, and Recharacterization Risks

While the shareholder’s current account is a flexible financing mechanism, its tax treatment in Morocco is strictly regulated and requires heightened vigilance. The Moroccan Tax Code allows the deductibility of interest paid to shareholders only if several cumulative conditions are met.

In particular, for interest to be tax-deductible, the following conditions must be satisfied:

• the share capital must be fully paid up;
• the amount of remunerated advances must not exceed the amount of the share capital;
• the deductible interest rate must not exceed the ceiling rate set annually by order of the Minister in charge of Finance.

Failure to meet any one of these conditions results in the reintegration of interest into the company’s taxable income, with the corresponding corporate tax consequences.

From the shareholder’s perspective, interest credited to the shareholder’s current account is subject to withholding tax. The applicable rate is 30% when the shareholder is a natural person and 20% when the shareholder is a legal entity.

In practice, natural person shareholders may choose to grant non-interest-bearing advances without major adverse consequences. However, this approach is strongly discouraged when the shareholder is a legal entity. In such cases, the absence of interest may be characterized by the tax authorities as an abnormal act of management. The administration may then recharacterize the free advance as a remunerated loan and reintegrate “theoretical” interest—never actually received—into the taxable income of the lending company.

Moreover, the flexibility of the shareholder’s current account does not exempt the parties from strict traceability requirements. It is common for shareholders to finance the company through successive payments, but each contribution must be fully justified as to its origin.

Case law consistently holds that a credit balance in a shareholder’s current account that is not supported by evidence of the real origin of the funds artificially inflates the company’s liabilities and undermines the reliability of its accounts. The consequences may be severe: the tax authorities are entitled to reject the accounting records and to proceed with a reassessment of turnover, considering that the amounts recorded in the shareholder’s current account correspond to concealed income reinjected into the company.

Legal Securing of the Shareholder’s Current Account

Beyond financial and tax considerations, securing a shareholder’s current account also requires solid legal documentation. Too often, company executives rely solely on bank statements or accounting entries to justify the existence of the advance, which significantly weakens the company’s position in the event of a tax audit or legal dispute.

A shareholder’s current account agreement must be formalized in writing and submitted to registration formalities. Although this registration has a tax purpose, it is of fundamental legal importance: it confers a certain date on the agreement and makes it enforceable against third parties.

Conclusion

The shareholder’s current account is an effective and flexible internal financing tool, particularly well-suited to the operational needs of businesses. However, its effectiveness can only be fully secured through rigorous management and strict compliance with legal, tax, and evidentiary requirements.

The implementation of a written, duly signed and registered agreement, strict traceability of funds, and full compliance with applicable tax rules are essential to prevent recharacterization risks and to protect both the company’s and the shareholder’s assets.

Our firm supports companies and their shareholders in the structuring, formalization, and securing of shareholder current accounts, with the objective of optimizing treasury management while ensuring full legal and tax compliance.

The Moroccan Simplified Joint Stock Company (SAS) is a commercial company by form, with any objective. It is governed by Articles 43-1 to 43-15 of Law 5-96, and certain provisions of Law 17-95 relating to joint-stock companies.

Its main advantage lies in offering shareholders a legal structure where contractual freedom prevails, from drafting bylaws to operating procedures, thereby allowing for true effectiveness in the provisions usually contained in the bylaws.

1) CHARACTERISTICS OF THE SAS

Shareholders:

The simplified joint stock company may be formed by a single shareholder (Single-Member SAS or “SASU”) or multiple shareholders who may be either natural or legal persons, and whose profits or losses are only distributed or borne to the extent of their contributions. However, the bylaws of the SAS may stipulate special benefits for associated or non-associated persons.

Capital Structure:

In principle, the elements related to the SAS capital are framed as follows:

• Minimum capital amount: Freely determined by the bylaws.
• Cash contribution: At least one-fourth (1/4) must be paid up at the time of incorporation, with the surplus to be paid within a maximum period of 3 years.
• Contribution in-kind: Fully paid up at incorporation.
• Contribution of industry (knowledge, technical skills, and know-how): Possible in exchange for non-transferable shares.

Directors:

The appointment of a single president (shareholder or not), whether natural or legal person, to act on behalf of the SAS is mandatory.

Governance Bodies:

The SAS offers total freedom in setting up the company’s executive, providing several options such as:

• Opting for a company managed solely by a president, and, if necessary, by one or more general managers.
• Deciding on a governance structure equivalent to that of a joint-stock company: either the unitary body (board of directors) or dualistic (management board and supervisory board);
• Or any other structure defined freely in the bylaws.

Auditors:

Their appointment is optional. It only becomes mandatory above a certain threshold set by regulatory provisions.

2) WHY CHOOSE THE SAS?

• The SAS allows for contractual control over the stability and structure of the shareholding.
• It ensures the protection of the interests of minority shareholders by assigning powers independently of any reference to the capital held by each shareholder.
• It provides freedom to the bylaws to organize the exercise of shareholders’ voting rights and the definition of collective decisions, both in form and substance.

3) HOW TO CREATE THE SAS?

Creating the SAS follows the same procedures as other forms of companies before it is registered with the Moroccan Trade Register (Registre du commerce). Here are the steps to create an SAS:

1. Capital formation,
2. Establishment of subscription and payment forms in case of cash contribution,
3. Drafting and signing of the bylaws,
4. Filing of the incorporation dossier and registration with the Trade Registry, followed by publication of the incorporation notice in the Official Gazette and the Official Bulletin,
5. Identification with the tax authorities and affiliation with social security organizations.

In conclusion, the simplified joint stock company represents a flexible legal structure suitable for many entrepreneurial projects.

At Mkonsulting, we understand the crucial importance of choosing the right legal form for your business. We are here to guide you through every stage of your company’s establishment, from the initial concept to the finalization of the bylaws. Our experienced team will guide you through the process, ensuring that your needs are fully met and that your business is properly established to thrive.

Feel free to contact us for any requests regarding business creation in Morocco.