Bounced Cheques update – UAE Central Bank Amends Commercial Transaction Law
January 10, 2022
Federal Law No. 14 of 2020 (the “Amended Law”) which has been approved and passed has amended the Commercial Transaction Law in relation to the bounced cheques. The amendments came into effect from 2nd January 2022. The Central Bank of UAE has announced that the amendments shall cover the following:
- Decriminalization of the bounced cheques;
- Partial payments of the bounced cheques;
- Imposing strict administrative penalties for the issuance of cheques without required funds;
- Advanced and civil mechanism to collect the outstanding payments.
These amendments shall assist the aggrieved party in facilitating commercial and banking transactions related to the procedures for the collection of the cheque value. It will also help in reducing the negative aspects revealed by a practical experience of dealing with cheques.
Amongst others, one of the key changes is the decriminalisation of cheques issued without sufficient funds. However, the criminalisation of bounced cheques due to insufficient funds in cases of fraud, forgery and bad faith will stay.
Partial payment
The banks could partially fulfil the amount of the bounced cheque. The banks could make payment of any amount available in the cheque issuer’s account regardless of what sum is found in the account. Partial payment by banks has become mandatory. The acceptance of the partial payment rests on the decision of the cheque bearer.
Penalties and Punishment
The new amendment introduces circumstances in which the cheque issuer could be sentenced to imprisonment between six (6) months to two (2) years and a fine for a minimum of ten (10) per cent of the cheque amount.
Furthermore, the Courts may order a ban on the convicted person from practicing any commercial or occupational activity for up to three years if the crime occurred in the capacity of practicing a business.
There are further penalties introduced in the Amended law are withdrawal of existing cheque books from the convicted party, prevention of acquiring new cheque book for a maximum period of five years, freezing the professional and/or commercial activities of the corporate entity and cancellation of license and/or dissolution of the corporate entity if the party repeats the crimes as mentioned in the Amended Law.
How MBG can help
MBG Corporate Services with its experienced legal experts provides bespoke and tailor-made services to its clients in relation to any bounced cheques matters including preparing documents and checking credit history of the opposite party, coordinating with the relevant authorities and opposite party, assisting in the drafting of legal notices, claims and other works related to obtaining the payment from the opposite party.
Contact us for any bounced cheque issues today.
