MOROCCO Law and Practice Contributed by: Loris Marghieri, Dounia El Aissaoui, Julien Nouchi and Mounia Larhrissi, Gide Loyrette Nouel
The enforcement of a security requires no spe - cific fee. 3.5 Legal Requirements Before an Entity Can Give Valid Security In addition to corporate authorisations, a Moroc - can entity must ensure that the following rules are complied with when granting any security. • Financial assistance rule: Article 280 of Law No 17-95 on joint stock companies prohibits a target company from providing financial assistance – through advances, loans or security – for a third party to subscribe to or purchase its own shares. This restriction applies when the assistance is given in view of the acquisition or during the transaction. In theory, this prohibition does not apply to limited liability companies, as Law No 5-96 governing them contains no similar provi - sions. • Corporate benefit rule: Any company decision must serve its best interest. • Corporate purpose rule: Any security granted by a Moroccan entity for a third party must align with the entity’s corporate purpose. In addition, the creation of movable and immov - able securities will require (as the case may be) the completion of registration formalities with the National Register of Securities over movable assets or with the competent Land Registry. 3.6 Formalities When a Borrower Is in Default The secured lenders should have no difficulties collecting on a mortgage as long as the following criteria are met: • the mortgage is duly registered in the local Land Registry; • it is a first-ranking mortgage; and
• the borrower is not undergoing insolvency proceedings. It usually takes between six and 12 months to successfully enforce a mortgage. 3.7 Subordinating Existing Debt to Newly Created Debt Under Section 169 of Law No 39-08, debt prior - ity is determined by the registration date, with same-day registrations having equal rank. Prior - ity remains valid until officially withdrawn. To subordinate an existing mortgage to a new one, creditors must enter into a subordination or intercreditor agreement, which defines rank In principle, and provided that they did not cause the damage themselves, the holder of security over real estate cannot be held liable for envi - ronmental damage. 3.9 Effects of a Borrower Becoming Insolvent A security interest granted by a borrower remains valid under Moroccan law, even in case of insol - vency. However, creditors cannot enforce security interests during insolvency proceedings. Non- privileged creditors are barred from initiating or continuing individual claims against the debtor. Additionally, under Article 714 of the Commer - cial Code, if a security is deemed harmful to the bankruptcy estate, the court may annul securi - ties granted within six months before the debt - or’s bankruptcy declaration. exchange and enforcement rights. 3.8 Lenders’ Liability Under Environmental Laws
711 CHAMBERS.COM
Powered by FlippingBook