Q: Do the local sponsors have financial responsibility for bounced cheques from the company that they are sponsored? A: The signatory of dishonoured cheques would be liable for criminal prosecution if the beneficiary of the dishonoured cheque files a complaint. The Public Prosecutor may then refer…

Dear Sir/Madam, Please note that my response to your question will be purely from an academic point of view based on the limited preliminary information that has been provided. Therefore, it should not be treated as a legal opinion for the want of adequate knowledge and review of relevant documents when read with the applicable laws. A situation where a cheque is dishonoured attracts both criminal and civil liability. Under Article 401 of Federal Law No. 3 of 1987, the signatory of the dishonoured cheque would be liable for criminal prosecution if the beneficiary of the dishonoured cheque files a complaint. The Public Prosecutor may then refer the case to the court who may pass the judgment, which if the signatory is found guilty, may result in a fine, detention or both. In addition, a travel ban may also be imposed at any time on the signatory of the dishonoured cheque. Furthermore, even if the signatory is convicted of criminal liability and has served the jail term, the beneficiary of the dishonoured cheque could then file a complaint in the civil court for the unpaid amount. The signatory would then either have to repay the beneficiary or, alternatively, serve a jail term, which once served would leave the signatory free. We understand that the cheque was signed by the managing director of the company. It should be noted that according to Article 23 of Federal Law No.2 of 2015, a company may be bound by the acts of its managing director if it arises upon the usual management of the business. Therefore, we would recommend that you call us to further discuss this matter, as the Memorandum of Association and other company related documents will need to be reviewed to provide you with adequate advice. We look forward to hearing from you.

Responsibility of partners for bounced cheques signed by the company manager

Questions & Answers

Questions & Answers

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What to do if the drawer of a bounced cheque left the UAE?

Q: I have a bounced cheque issued by a person who has already left the country and closed his local bank account. I filed a criminal case with the police some time ago, but there is no result till now. Can I do something else to get the money?

Feb 21, 2016

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Bounced cheque case: jail term, travel ban, court fees, etc.

Q: PLEASE REPLY AS EARLY AS POSSIBLE UAE CHEQUE BOUNCE CASE (PERSONAL CHEQUE) IF AN INDIVIDUAL FILE A POLICE CASE 1) What will be the minimum jail terms for Cheque bounce case? During jail terms whether he will be on travel ban? During jail term whether he can come out of jail by giving somebody's passport as security? After completing the jail term whether he will be still on travel ban as he has not paid the money against the cheque? If he did not pay the money during police case, how can I get back the money? 2) When he is on jail terms during police case, whether we can proceed with the civil case for cheque bounce? 3) For proceeding civil case whether we have to deposit any amount to court? Your valuable advice will be highly appreciable. Thanks

Apr 15, 2017

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Liability for bounced cheques in case of joint signatory authority

Q: I was a partner in a company with joint signing authority for the bank account. I sold my share and the memorandum of association changed. However, due to some reasons or busy schedule, I could not change my signing authority from the bank. My partner issued me a letter that for all released cheques, he will be responsible. Now, in the current situation, some cheques are bounced and police called me. Please advise, what should I do? Will this letter and change in memorandum protect me? My partner is still accepting his liabilities for all bounced cheques but he has no money to settle, and I am stuck. Kindly advise.

Dec 18, 2017

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منع مدير الشركة من توقيع شيكات باسم الشركة

س: أنا شريك في شركة مقاولات للبناء (فيلا). المدير في الشركة ذات المسؤولية المحدودة كتب شيك وهرب خارج البلاد وأنا شريك 51 ‎%‎. ما هو الإجراء المناسب لمنع حدوث هذا، هل يكتب في الوكالة - عدم كتابة شيكات أو التوقيع و يمنع أخذ قروض بإسم الشركة؟

Jan 21, 2019

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مسؤولية الشريك في الشركة ذات المسؤولية المحدودة عن الشيكات بعد ترك عمله

س: كنت مديرًا وشريكًا بشركة ذات مسؤولية محدودة، وبحكم وظيفتي بصفتي مديرًا للشركة، وقَّعت شيك ضمان لأحد العملاء بمعاملة تجارية باستخدام دفتر شيكات الشركة، وبعد عامين تركت وظيفتي وانسحبت من الشركة وسلَّمتها لمدير وشريك آخر. حدثت بعد هذا التاريخ خلافات تجارية بين الشركة من ناحية وبين العميل من ناحية أخرى فرفع العميل دعوى مدنية ضدي وضد الشركة. ما موقفي وحجتي القانونية في هذه المشكلة مع العلم أن قيمة الشيك مُثبتَة بالعقد ومُعرَّفة على أنها شيك ضمان وليس وفاء؟ شكرًا لحضراتكم!

May 3, 2020

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Liability of company director for a bounced cheque issued by the general manager

Q: My brother was the director of a company in Dubai with 16 per cent shareholding with 5 other partners. They had a general manager who had signing authority. The general manager signed cheques worth AED 7 million and disappeared. My brother lives in Kuwait. What is the impact of the bounced cheque on my brother?

Dec 30, 2020

1264

Who is the signing authority of a company to give a POA?

Q: In a company, there are 3 partners and one of them is the manager. Now, who can give the POA for court cases to lawyers? Any of the 3 people can give or only the manager can give as per the UAE companies law?

Feb 11, 2021

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Wife stuck with husband's company's bounced checks. Can he be responsible?

Q: Dear Sir/Madam, My husband started a company in my name and I signed several cheques on his behalf and a few of them bounced due to lack of funds. Now, I have 2 civil cases and a travel ban on me. Can my husband take up the responsibility of the cases legally and get me released from the cases and travel ban? He was doing all the operations and I was just an owner for the sake of name as he was employed in a private company during the time of the formation of the company.

Dec 13, 2023

115

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