WHAT TO DO IF AN INVESTMENT DISAPPEARS
What are the rules around bounced cheques?
In late 2017, Dubai Courts made a decision to issue fines instead of jail sentences for bounced cheques up to Dh200,000. The fines — which are not payable to the cheque beneficiary — are Dh2,000 for dishonoured cheques up to Dh50,000; Dh5,000 for cheques between Dh50,000 and Dh100,000; and Dh10,000 for cheques between Dh100,000 and Dh200,000.
“For any cheque bounced over Dh200,000 there still attaches a penalty of imprisonment for up to three years for the person signing the cheque, in addition to a fine,” says Nichola Reece-Burton, head of litigation and dispute resolution at James Berry Law in Dubai.
n 2018, the UAE’s Federal Criminal Procedures Law was amended to include a new section regulating the mechanism of ‘penal orders,’ meaning that certain crimes subject to certain conditions will result only in a fine. Each emirate's prosecution office is required to issue a resolution identifying the crimes subject to penal orders.
“It is expected that such resolutions will be issued soon to include dishonoured cheques,” says Omar Khodeir, a senior associate in the litigation department of Al Tamimi law firm in Dubai.
There are exceptions to the treatment of dishonoured cheques, including but not limited to, under circumstances outlined in the UAE’s bankruptcy law and in relation to real estate transactions. It is also worth noting that issuers of bounced cheques who leave the UAE may still face the risk of arrest and possible enforcement of a judgment against their assets in a foreign country, says Mr Khodeir.
Companies who repeatedly bounce cheques are still allowed to operate, but will be blacklisted at the Central Bank of the UAE and will have a poor credit score at the Al Etihad Credit Bureau, says Ms Reece-Burton.
“Banks will also often insist on the company closing the bank account, making trading very difficult — if not impossible,” she adds.
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