Cheques are the most common negotiable instrument used by businessmen and common people as security for commercial and individual transactions. Taking note of the frequency of usage of cheques in both business and individual transactions, the UAE Government considers a bounced cheque as a serious offence which would invite both criminal and civil actions against the defaulters.

Article 483 of the UAE Federal Law No. (18) of 1993 Commercial Transactions Law defines a cheque as “a commercial paper containing an order issued by the drawer upon a bank (the drawee) to pay in the date indicated therein, as being the date of issue, a specifying sum of money to the order of a third person being the beneficiary or the payee.”

As per the above provision, there are three parties to the cheque such as, (i) Drawer, (ii) Drawee and (iii) Payee. A Drawer is a person who provides a signed cheque wherein he orders the bank to pay the sum to the payee. A drawee is the bank from which the cheque is drawn. The payee is the beneficiary to whom the bank should pay the amount upon presentation of the cheque.

A cheque becomes bounced/ dishonored/ returned due to the following reasons:

1. Insufficient funds in the bank account of the drawer.
2. False/fake signature on the cheque regardless of

• On receipt of order by the Bank from Drawer to refrain from the payment.

1. Closure of bank account before encashment of the cheque.

As per the Article 401 of the UAE Penal Code, if a cheque is bounced due to any of the grounds mentioned therein, the Drawer shall be punished with detention or fine. Article 401 reads as “Shall be sentenced to detention or to a fine, whoever draws in bad faith a cheque without sufficient funds or who, after giving the cheque withdraws all or part of the funds, so that the remaining balance is insufficient to cover the amount of the cheque, or gives order to the drawee to stop payment, or if he deliberately writes or signs the cheque in such a manner as to make it non payable.”

According to Article 617 of the UAE Federal Law No. (18) of 1993 Commercial Transactions Law, the payee can present the cheque before the bank for collection only on or after the date written on the cheque, not before. The time limit to present the cheque as per Article 618, is six months from the date mentioned on the cheque. However, a bounced cheque/cheque without sufficient provision, would remain a criminal offence under the UAE Federal Penal Code after the lapse of the 6 months period, during the statute limitation period of 5 years prescribed by law for all criminal offences.

The UAE laws are drafted in such a way to protect the interests of the beneficiaries of the cheques and imposes strict criminal charges as well as civil actions against those who offer cheques with insufficient balance.

At the point when the cheque is dishonored, the payee is legally entitled to lodge a criminal complaint as well as a civil case in order to ensure punishment to the defaulter while getting their money back. In this way, the creditors are very much protected under the law.

When the creditor/payee files a criminal complaint about the dishonored cheque, the police authority will contact the drawer and require his presence before them. At this stage, the drawer can either settle the matter by paying the amount or else, he can decide to face any further legal actions. Otherwise, the Police will register a criminal complaint against the drawer and transfer the case to the Public Prosecution Department for further investigations.

It ought to be noted that in the year 2017, the Emirate of Dubai introduced a special law i.e., Dubai Law No 1 of 2017 ( also known as Criminal Order Law), which permits the Dubai Public Prosecutor, within the limits set out in the law, to find the defendant guilty of certain misdemeanors and issue a penalty for the crime committed without the matter being referred to court.

Accordingly, the Dubai Public Prosecution issued decision no. 88 of 2017 wherein the offender of a bounced cheque can avoid the criminal proceedings by paying a fine if the amount of the Cheque is not exceeding AED 200,000. The amount of fine varies between AED 2,000 and AED 10,000 depending on the cheque value.

If the amount of the cheque does not exceed AED 200,000/- it will be categorized as ‘simple offense’ with a penalty based on the amount mentioned on it and this penalty is announced by Public Prosecution Department as a Criminal Order. Once the fine is paid, no imprisonment can be imposed on the offender in the Emirate of Dubai. However, civil actions can be initiated against the offender.

However, if the amount of the cheque exceeds AED 200,000/-, the Public Prosecutor upon receiving both parties’ statements will refer the case to the criminal court, which will examine the case in detail and will pass its judgment accordingly.

Conclusion:

The UAE law treats dishonor of cheques as a serious, cognizable offence where the aggrieved party has the right to file a criminal complaint as well as a civil case against the defaulter (drawer) for recovering the amounts.

Considering the above serious legal consequences, the parties mostly resolve the issues through settlement in its early stage.

However, if for some reason the amicable settlement is not reached, and the matter gets escalated to the next level, appointing an experienced lawyer as soon as possible would be the most practical decision to prevent further legal implications and damages.

For any queries or services regarding Cheque bounce cases, you can contact us at (+97150) 625 8284 or send us an e-mail on consultants@akramsheikhlawassocciates.com . Also visit our website www.akramsheikhlawassocciates.com

The post Bounced Cheque and its Legal Consequences in the UAE first appeared on Law Firm Dubai: Corporate, Criminal, Divorce, Family Lawyers.]]> https://www.akramsheikhlawassocciates.com/bounced-cheque-and-its-legal-consequences-in-the-uae/feed/ 0 https://www.akramsheikhlawassocciates.com/uae-is-expected-to-ratify-federal-debt-law-this-year/ https://www.akramsheikhlawassocciates.com/uae-is-expected-to-ratify-federal-debt-law-this-year/#respond Sat, 25 Jan 2020 11:59:04 +0000 https://www.akramsheikhlawassocciates.com/?p=3884 The United Arab Emirates government is contemplating the enactment of a law by year end which will allow the federal government to issue bonds. The UAE would issue around 80 billion to 100 billion dirhams ($22 billion to $27 billion) worth of debt, a senior finance ministry official stated. The official further stated that he expects the law to be ratified […]

The move aims to setting the controls and obligations governing the venture capital fund, rooted in a solid cooperation and partnership based model between the public and private sector, with an aim to expand the scope of funding innovation-based projects in the UAE.

this will help promote the competitiveness of small and medium-sized businesses in innovation and technology-based areas.

A venture capital fund is a special fund that invests in high-risk investments such as new technologies based projects and troubled projects, as well as in businesses with new and innovative ideas.

Under the new legal system, if the value of assets under management exceeds AED180 million, it is obligatory for the business to issue an annual report according to IFRS standards, appoint a risk management officer. The business exposure to risk should not exceed the fund’s net asset value.

Pursuant to Article [3] of the decision, the venture capital fund has 3 obligations. The first obligation is that the fund should invest not less than 70 per cent of its assets in one or more of the following fields:

1-Lending new or troubled projects or participating in these projects by not more than 30% (thirty per cent) of its assets.

2-Instruments issued by unlisted companies in the market.

3-Units of other venture capital not exceeding 10% (ten per cent) of its assets.

4-Lending businesses mentioned above by not more than 30% (thirty per cent) of its assets provided that the fund should be an investor in the same field of business.

The second obligation is that the fund’s investments should not exceed 30% (thirty per cent) of its assets in the investments that the Emirates Open public investment fund (Emirates UCITS) is allowed to invest in. In case of investing abroad, the fund should commit to the above mentioned obligations.

Article [4] of the decision stipulates further 3 obligations on the fund, including conducting regular evaluation of its assets and units at least one time per year, issuing an annual report that details the fund’s investments, activities, profits and losses, and the percentage of fund’s borrowing or collateral should not exceed its assets.

The UAE Federal National Council

The UAE Federal National Council Committee for financial affairs examined the UAE Central Bank’s policies on Sunday in Dubai. The head of the committee emphasized upon the importance of the Authorities’ opinion and its inclusion in the committee’s report, in compliance with the laws and regulations regulating the activityof the central bank, particularly the central bank’s policy in promoting the employment of UAE Nationals, regulating the financial sector and the organization and planning of the monetary, credit and banking policies. The committee decided to invite representatives of the UAE banks and the Central Bank to attend the upcoming meeting, in an effort to communicate with different sectors of society, particularly the financial sector, during discussions of major issues.

The Free Zone has issued a new set of guidelines Jebel Ali Free Zone Companies Implementing Regulations 2016. Foreign companies no longer need to establish legal entities such as a branch or a new company altogether.

The guidelines aim to simplify the existing regulations for Foreign investors to incorporate new companies, by allowing the foreign companies to easily transfer to the Free Zone instead of setting up branches or subsidiaries for their business. Free Zone Entities and Free Zone Companies will further be allowed under the new regulations to be listed on the stock exchange as Public Listed Companies.

In fact JAFZA has now introduced for the first time a new legal entity type “Public Listed Companies (PLC)”. All legal entities such as the Free Zone Establishment (FZE), Free Zone Company (FZCO) and Branches are brought now under one structure of PLC. Restructuring of businesses from FZE or FZCO to PLC is possible and so is the vice-versa. In doing so, Jafza intends to bolster the business continuity in the Free Zone. Moreover, the foreign companies can easily transfer to the Free Zone whilst all their commitments remain valid. This will ensure international businesses find the Free Zone conducive for foreign investments.

With a more forward approach, Jafza has struck the blanket minimum capital requirement provision. Now, businesses ca be set-up with capital sufficient for the activities applied for. Also, the minimum requirement of shareholders now in an FZCO will be two and maximum will be fifty.

Shares will now be differentiated into various classes. This will provide flexibility to owners to provide voting rights to shares. Owners can now raise equity while retaining management over the company by providing management rights shares to the incumbent management.

Sultan Ahmed bin Sulayem, Group Chairman and Chief Executive Officer of DP World and Chairman of Ports, Customs and Free Zone Corporation, said: “The new regulations streamline all the mandatory legalities related to the registration, administration, legal benefits and obligations of organizations in the free zone. These changes reflect the needs of an ever-evolving market in terms of providing facilities that are prompt, secure and form the best international practice.”

The new regulations will allow FZE and FZCO to be listed on the stock exchange as PLC. Thus, these PLCs can now access capital through capital markets subject to relevant Markets Laws in the UAE.

Article by Akram Sheikh Law Associates Advocates & Legal Consultants the Leading Dubai Law Firm providing full legal services & legal representation in UAE courts

The Law is drafted in broad terms to ensure that it encompasses all discriminatory conduct regardless of how it is expressed. In this regard the Law criminalizes and condemns any acts that incite religious hatred or which insult religion and actions comprising hate speech or the promotion of discrimination or violence against others through any form of expression whether oral or written. This covers speech and the written word, books, pamphlets or via online and media, including online, print, radio visual media or social media.

The law also stipulates for punishment against anyone for calling other religious groups or individuals as infidels or unbelievers, and prohibits any acts insulting God, his prophets or apostles or holy books or houses of worship or graveyards.

The law further has provisions for fighting discrimination against individuals or groups on the basis of religion, caste, doctrine, race, color or ethnic origin.

Furthermore, Article 6 of the Law states in broad terms that a person who commits an act of discrimination may face imprisonment of up to 5 years and/or a fine of between AED 500,000 and AED 1,000,000.

Pursuant Article 9 of the Law, the same penalties may be imposed where a discriminatory act is committed by a public employee upon or due to performing his job.

The legislator’s intentions behind the law are to reinforce the sound foundation upon which the UAE society was built, and preserving the environment of tolerance, broad­ mindedness and wide acceptance in the UAE of other cultures, races, and religions. The law further aims to secure and safeguard people living in the UAE regardless of their origin, religious beliefs or race, against acts that incite hatred and intolerance.

This is particularly important in a multi-cultural country and society as the UAE, where individuals of different ethnicity, religions, races and colors, from all over the world come together to live and work, and where the expatriate population forms more than 85% of the general population.

If you have been the victim of an act of discrimination on the grounds of religion, caste, creed, doctrine, race, color or ethnic origin, you may contact our expert legal advisers and criminal lawyers in Dubai, who will handhold you through the judicial process of exerting your rights, where you will be represented by the leading law firm in Dubai and the UAE, Akram Sheikh Law Associates Advocate & Legal Consultants.

Article by Akram Sheikh Law Associates Advocates & Legal Consultants the Leading Dubai Law Firm providing full legal services & legal representation in UAE courts