The government presents details of a draft law that raises the quality of companies’ financial reports

The General Secretariat of the Government has opened the door for public comment and expression of opinion before Moroccan citizens regarding a new draft law related to consolidated financial statements, submitted by the Ministry of Economy and Finance, and comes within the framework of keenness to raise the quality of companies’ financial reports, as well as develop their accounting statements, and thus enable them to give an honest picture of their situation. Finance in order to consolidate the principles of transparency and good governance, and keep pace with international standards adopted in this field.

According to his introductory note, this new text aims to obtain accounting and financial information of better quality that allows for comparing the performance of companies and consolidated bodies, and to keep pace with reforms that aim to integrate the national accounting system into the path of development of international standards to make it a means of achieving greater transparency, improving the business climate, and attracting foreign investments.

The aforementioned draft law, which includes 15 articles distributed over seven sections, will enable the expansion of the scope of companies and bodies obligated to compile accounts and give a regulatory character to the national standards related to them, with the obligation to compile the compiled annual financial statements and prepare the management report related to them by the administrative council or the board of directors. The collective management, managers, or any other similar body, to be submitted for approval by the annual ordinary meeting or any other deliberative body of the company or the consolidated body, with these data subject to the control of auditors or external auditors registered with the body of accounting experts.

This new text will also enable shareholders, partners, or members of companies and consolidated bodies to view the accounts before the regular annual general assembly or any other deliberative body is held, with financial penalties imposed in the event of a violation of some of the requirements contained in the document itself.

According to Article Three of this text, “the consolidated financial statements present the assets, liabilities, internal capital, returns, costs, and cash flows of the company or consolidated entity, as well as the entities over which it exercises sole control, joint control, or significant influence, as if they belonged to a single entity, referred to as: the consolidated.” “.

As for Article Four, it specifies the companies and bodies that must prepare and publish consolidated financial statements. This concerns legal persons who invite the public to subscribe, credit institutions and similar bodies, and financial conglomerates as specified in Law 103.12 relating to credit institutions and bodies considered to be the same, and companies. Insurance or reinsurance, in addition to public institutions, state companies, public subsidiaries and concessionary companies referred to in Article 1 of Law 69.00 relating to the state’s financial control over public establishments.

Article Eight of this project required the company or consolidated body, with the diligence of the Administrative Council, the Collective Management Board, the manager or managers, or any other similar body, as the case may be, to prepare a management report on the “assembled whole” for the ending financial year, while Article Nine specified A period of three months from the date of the close of the fiscal year for the aforementioned bodies to compile the annual financial statements and prepare the related management report, to be submitted for approval by the annual ordinary general assembly or any other deliberative body of the company.

Every shareholder, partner or member has the right, starting from the date of sending the invitation to the General Assembly, and at least during the fifteen days preceding the date of the meeting, to review at the social headquarters of the company or the authority the consolidated financial statements and the relevant special management report, in addition to the report of the auditor or auditor. As well as the draft recommendations related to the approval of consolidated accounts, while the requirements of the same project required companies to deposit two copies of the financial statements with the clerk of the commercial court to which their social headquarters is affiliated, along with a copy of the auditors’ or auditors’ report, within a period of sixty days from the date of their approval.

As for penalties, Article 13 stipulates that “members of the administrative council, the collective management council, administrative or management bodies, or members of any other similar body shall be punished with a fine of fifty thousand dirhams to two hundred and fifty thousand dirhams.” For the company or the consolidated body, who did not prepare the consolidated financial statements and the relevant management report for each fiscal year, or who did not make them available to shareholders, partners, or members, or who did not publish them…or who did not submit them for approval to the annual general assembly or any other deliberative body.” .

The same text also approved financial penalties ranging from one hundred thousand dirhams to five hundred thousand dirhams against the above-mentioned persons who deliberately published or submitted consolidated financial statements to shareholders, partners, or members that do not give an honest picture of the financial position of the association, its financial performance, and its cash flow at the end of each fiscal year.