CMS Expert Guide to Public Takeovers in Morocco

Yes – The 26-03 Act (amended and supplemented by the 46-06 Act and 19-14 Act) regulates public takeover offers for listed companies on the stock market. The 17-95 (amended and supplemented) regulates joint stock companies including listed companies and the 104-12 Act regulates the control of takeover offers, in order to preserve market competition. 

The regulatory authorities for takeover offers are the Council for the Code of Ethics in Securities (CDVM); the Moroccan Competition Council and the Moroccan capital market authority (AMMC).  

• Takeover offers: the offeror communicates to the shareholders of a target company its intention to acquire all or part of the shares of a listed company at a specific price. 
• public buyout offers: an acquisition by a natural or legal person holding the majority of the voting rights of a listed company  of the shares of the minority shareholders. 
• public offering(public offer to sell): a procedure whereby an individual or legal entity makes public its intention to sell the securities of a listed company. 
• public exchange offer: payment is made through the exchange of shares and not in cash. unlike in a takeover bid, the offeror acquires the shares in cash.  
• mixed public offer: combining both a public exchange offer and a takeover offer. 

The law does not directly address this issue. CDVM and the AMMC ensure the proper conduct of  public takeover offers. Though the law does not specifically require the parties to takeover to engage advisers , it is advisable for the parties to engage specific advisers.  

• A takeover offer is mandatory when a natural person or legal entity acting alone or in concert, holds directly or indirectly a given percentage of the voting rights of a listed company. The percentage referred to above is determined by the supervisory authority on the proposal of the CDVM but must not be less than one third of the voting rights of the target company. 
  There are limited exceptions from the requirement to make a takeover offer: 

1. A waiver may be granted when the percentage of the voting rights is exceeded but does not impact the control of the company existing prior to the change. 
2. A waiver may also be granted when the voting rights held in excess of the percentage result from a direct transfer : any transfer of ownership of a security listed on the Stock Exchange, not implying pecuniary compensation or any other compensation of whatever nature and which is carried out between partners, ascendants and direct descendants to the first and second degree, as well as following an inheritance or bequest. 
3. A distribution of assets made by a legal entity in proportion to the rights following a merger or a partial contribution of assets 
4. A subscription to the capital increase of a company in financial difficulties (distressed company).  
5. A public buyout offer is mandatory when a natural person or legal entity acting alone or in concert, holds directly or indirectly a given percentage of the voting rights of the listed company. In this case, the percentage referred to above is determined by the administration (Ministry of economy and Finance) on the proposal of the CDVM but it may not be  less than 90% 

• A public buyout offer is mandatory in the event of de-listing of a company’s equities for any reason whatsoever. 
• A public buyout offer can be imposed by the CDVM on the natural or legal persons holding the majority of the capital of a listed company, if  two conditions are met:  

1. the percentage of the voting rights held by the aforementioned natural and legal persons must not be less than 65%. 
2. A public buyout offer must be applied to the CDVM by a group of holders of capital equities, not belonging to the aforesaid majority.

• Implementation of Takeover: The transaction must be approved by the authorised bodies within the target company , namely the board of directors or the general assembly,  
• in accordance with the articles of associations  and also with any shareholder agreement if there is one. An application to the competition council in order to obtain an authorisation relating to concentrations is also required. 

The procedure: the filling of a public takeover offer is followed by the publishing of a notice by the AMMC.  

The publication of this notice marks the beginning of the offer period: The AMMC will ask the Casablanca Stock Exchange to suspend the quotation of the target company’s equities the subject of the takeover offer.  

The AMMC has fifteen (15) working days to assess the admissibility of the public takeover offer. When a public takeover offer is declared admissible, the AMMC notifies the offeror of its decision and publishes a notice of admissibility.  

In answer to the second question, since the law does not expressly state the procedure for the acquisition of 100% of the shares the above-mentioned procedure should be applicable. 

The maintenance of confidentiality may be provided for in a contract between the parties. In addition, the stage and period during which the transaction is taking place, affects the issue of confidentiality of a potential offer in the context of any obligation to announce material price sensitive information. 

An offer can be made when the percentage of voting rights set by the Ministry of the Economy and Finance is reached. 
The offeror must file a draft public offer with the CDVM. This proposal must include the following proposals and information:  

• the offeror’s objectives and intentions ;  
• the number and type of shares in the target company that the offeror already holds, or may hold its sole initiative, as well as the date and terms on which their purchase has been or may be made;  
• the price or exchange ratio at which the offeror proposes to acquire or sell the shares, the factors it has used to determine them, and the terms of settlement, delivery or exchange terms;  
• the number of shares covered by the proposed public offer; 
•  the percentage of voting rights, if any, below which the offeror reserves the right  
• the offeror reserves the right to withdraw its offer. 

The usual conditions of an offer are the receipt of necessary regulatory approvals and achieving a minimum acceptance level.  

The offeror  must disclose the means put in place for the financing of the public takeover offer, and their impact on the assets, the activity and the results of the offeror, and if necessary, of the target company. In this context, the offeror will usually engage a financial adviser. 

Yes- The price or exchange ratio must be established according to relevant and generally accepted methods. The criteria used in these methods must be known, accurate, objective, significant and multiple and lead to a fair and legitimate valuation of the target company.  

In addition, if during a takeover offer, the offeror and any persons acting in concert with the offeror purchase equities of the target company on the market at a price higher than the offer price, the price of the takeover is automatically increased to the level of the offeror’s market purchase price.  

The 17-95 Act imposes the principle of equality and proportionality between shareholders in the context of takeover offers.  

The aforementioned Acts do not impose an obligation on a target company to communicate due diligence information. The target company has the choice of whether to communicate information to a potential offeror. 

As the law does not specify the protective measures that the offeror may implement, the parties may include protective measures in the contract, as long as they are in compliance with Moroccan law. 

The Acts do not address either of these situations. The target directors have no obligation to engage with a potential offeror. 

Yes- In the context of a public takeover offer, particularly a mixed offer (where the consideration for the offer is a combination of cash and securities), the offeror and the persons with whom it is acting in concert, may not intervene in the market for the equities of the target company or for the equities issued by the company whose securities are offered in exchange.  

In addition, during the period of the public takeover offer, the target company may not increase its treasury shares.  

Yes- such commitments can be provided by contract. 

The provisions of the Acts regulate the situation in which target company shareholders can sell or agree to sell their shares to the potential offeror outside the offer. It is necessary to take into account the impact of any such arrangements on the takeover offer.  

This issue will be addressed by the information document(s) (see Question 19).  

• The CDVM has a period of 10 working days from the publication of the draft of the offer to examine its admissibility. 
• The CDVM has a maximum period of 25 working days to approve the information document(s) (see Question 19), starting from the date of their filing. This period may be extended by CDVM by an additional 10 working days if additional justification or explanations are necessary. 
• After obtaining the CDVM approval, the information documents must be published within a maximum of 5 working days after obtaining the necessary approval.  
• Regardless the timeline that concerns the competition council.  

The key documents required are:   

• the draft of the public offer document,  
• the information document(s). The content of the information document(s) is determined by the CDVM in each case,  
• the authorisation(s) of the authorities or bodies empowered to authorise the proposed transaction, in accordance with the legal or regulatory provisions,  
• A request for approval drawn up and signed by the offeror and, if applicable, the target company, addressed to the president of the AMMC 
• The statement of securities accounts justifying the total number of shares of the target company held by the offeror 
• A copy of any governance report relating to the offer  
• A copy of the valuation report of the securities covered by the offer.  
• A copy of the minutes of the social bodies of the offeror having proposed, approved and fixed the terms of the offer 

Public offers may be the subject of competition, either through one or more competing public offers, or through a higher offer.  

A competing public offer is a procedure whereby any individual or legal entity, acting alone or in concert as defined in Article 10 of the law 26-03, may, from the opening of a public offer, and no later than 5 trading days before its closing date, file with CDVM a competing offer for the shares of the company targeted by the initial offer, under the conditions set out in Title IV of the said law. 

In the event of a competing public offer, the initiator of the initial or previous public offer must inform the CDVM of its intentions no later than 10 days before the closing date of the said public offer.  He may maintain his offer, renounce it or amend it by means of a higher offer. 

• In the context of a mandatory public takeover offer  and a voluntary takeover offer if the CDVM considers that the proposed offer does not respect the principles set out in Article 13 of the 26-03 Act (which include meeting principles of shareholder equality, market integrity and fairness) and/or does not contain sufficient guarantees to ensure its proper implementation, the offeror must modify its offer in accordance with the CDVM’s recommendations, in order to comply with the said principles or provide any required guarantees.  
• In the context of a voluntary public takeover offer -, CDVM shall notify the offeror of the necessary amendments and/or any necessary guarantees.  

In the context of a public buyout offer, minority shareholders receive compensation for their shares after being withdrawn from the target company’s share capital.

The 26-03 Act governs the situation when a takeover offer is rules not admissible but does not make any provision for the consequences of an offer lapsing if insufficient acceptances are received. 

A company can de-list in the context of a mandatory buyout offer if it crosses the specified threshold of the capital and voting rights.  

The delisting of securities listed on the Stock Exchange may take place at the request of the legal entity concerned. The lack of payment of dividends during the last three financial years constitutes one of the elements “taken into consideration” in relation to any delisting.