Dubai: The new amendment to the UAE’s Commercial Transaction Law gives power to the court to suspend the trade licence of a defaulting company for six months.
As bounced cheque issues arise in various circumstances like personal or individual transactions, purchases, commercial transactions, bank loans, property rents, etc, the new amendments will preserve the cheque beneficiary’s rights by considering the cheque as an executive deed, which fast track the collection process through the civil court.
Last year, the UAE Cabinet amended certain provisions of Federal Law No 18 of 1993, the Commercial Transactions Law, including those related to bounced cheques.
As part of reducing delay for the cheque beneficiary and issuing penalties against the issuer of the bounced cheque, the new amendment gives the power to the court to 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.
Wageh Amin Abdelaziz, senior legal adviser at World Centre Advocates and Legal Consultants, told Gulf News that Article 644 Bis 1 of the amendment states that if the issuance of the bounced cheque is in the name or for the benefit of a corporate person, the person in charge of actual administration shall not be liable to punishment unless it is evident that such person has been aware of the crime or that such person has committed the crime for the benefit of himself or third parties.
Where the liability of the natural person is not evident, the legal person shall be subject to a penalty of no less than twice the legally applicable penalty for this crime and no more than five times of it, according to the same 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,” said Abdelaziz.
Additionally, the court shall order the publication of judgement at the expense of the legal person in two widely circulated daily newspapers in the UAE or in two e-publishing media, one in Arabic and one in English.
It will be determined through the decision of the Ministry of Justice.
According to Abdelaziz, the amendments will have a substantial effect on financial institutions who greatly depend on cheques as a means of guarantee.
“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 amendment, the court may order any other punishments legally applicable.
Provisions of the second paragraph of this article shall not apply to licenced financial establishments subject to the said Federal Decree Law No. (14) of 2018.