Bounced cheques in the UAE: What amended law means for defaulters

Dubai: The new modification to the UAE’s Commercial Transaction Law provides energy to the courtroom to droop the commerce licence of a defaulting firm for six months.

As bounced cheque points come up in numerous circumstances like private or particular person transactions, purchases, industrial transactions, financial institution loans, property rents, and many others, the new amendments will protect the cheque beneficiary’s rights by contemplating the cheque as an government deed, which quick monitor the assortment course of by the civil courtroom.

Last 12 months, the UAE Cabinet amended sure provisions of Federal Law No 18 of 1993, the Commercial Transactions Law, together with these associated to bounced cheques.

As a part of lowering delay for the cheque beneficiary and issuing penalties in opposition to the issuer of the bounced cheque, the new modification provides the energy to the courtroom to order the suspension of the authorized particular person’s enterprise for not more than six months, and in case of repetition, cancellation of commerce licence and insolvency.

Wageh Amin Abdelaziz, senior authorized adviser at World Centre Advocates and Legal Consultants, instructed Gulf News that Article 644 Bis 1 of the modification states that if the issuance of the bounced cheque is in the identify or for the good thing about a company particular person, the particular person in cost of precise administration shall not be liable to punishment until it's evident that such particular person has been conscious of the crime or that such particular person has dedicated the crime for the good thing about himself or third events.

Where the legal responsibility of the pure particular person is just not evident, the authorized particular person shall be topic to a penalty of a minimum of twice the legally relevant penalty for this crime and not more than 5 occasions of it, in line with the identical article.

“The court may order the suspension of the legal person’s business for no more than six months, and in case of repetition, cancellation of trade licence and insolvency of the legal person,” stated Abdelaziz.

Additionally, the courtroom shall order the publication of judgement at the expense of the authorized particular person in two broadly circulated day by day newspapers in the UAE or in two e-publishing media, one in Arabic and one in English.

It will likely be decided by the determination of the Ministry of Justice.

According to Abdelaziz, the amendments may have a considerable impact on monetary establishments who vastly rely on cheques as a means of assure.

“The long awaited reform to the bounced cheque crime will play a big role in boosting business confidence between individuals and corporates as it will promote further investments and a company’s trust to deal with cheques in the UAE,” added Abdelaziz.

According to the modification, the courtroom could order another punishments legally relevant.

Provisions of the second paragraph of this text shall not apply to licenced monetary institutions topic to the stated Federal Decree Law No. (14) of 2018.