Laws involving Cheques in the UAE
The current law regarding commercial transactions was altered a little to give recipients of bounced cheques more opportunities for settlement recently. The UAE Cabinet approved this decision.
The prime minister and vice president of the UAE, Sheikh Mohammed bin Rashid Al Maktoum attended the Cabinet conference that reviewed old laws regarding offenses related to cheques.
The rules regarding cheques that bounce and such were reviewed and amended, these changes are planned to be effective in 2022.
It has been decided that cheques that bounce will be looked over in the court of law by a related judge.
The revised laws are intended to help provide an alternative to the current civil mechanisms. The main focus is on creating an alternative to making criminal lawsuits that will open space for reconciliation and set down the payment of the bounced cheques value as being the main alternative for a criminal lawsuit.
The new reforms would include many processes and alternatives to ensure that payments are received via cheques conveniently and quickly. One such approach is that, after deducting the sum from the funds available inside the issuer’s account, the obliging banks will be forced to partially pay the amount.
Even if the current law requires banks to make a portion of the cheque’s payment based on the amount existing in the account, many banks don’t follow it. The changes will definitely benefit both, the cheque’s issuer and its receiver.
The revised law seems to make sure that the payees of cheques that bounce will get a choice to reconcile rather than be given a criminal grievance.
This will benefit the marketing community a lot and will encourage honesty and cooperation.
However, as we know these amendments will not take place till 2022 and the complete details are yet to be revealed.
The current laws were disrupting businesses greatly and were not designed with the impact they would have on the market at all. The new laws are more respectful in their thinking. While this is good news, businesses may need to consult audit firms for any actions needed in Dubai.
The current laws ensure that if for any reason a holder of a joint account passes away the account will be frozen and the money inside of it can only be accessed by the holder’s legal heirs. The new laws will change this as well. If one account holder passes away or loses hold of the account, the other holders may inform the involved bank within ten days from the date of the holder losing control. The bank will hereby put limits on the withdrawal from that account and it will no longer be frozen.
This redefinition of the current laws is a great attempt to bring more ease and comfort to the UAE audit firms. Especially in the midst of a pandemic when almost every business is going through various hardships and declines.
Further changes include the banning of convicted criminals from getting new cheque books issued for five years and pausing their commercial activities.
Additional punishments will also be added for those who break the law, except banks and other financial institutions, including fines, a six-month suspension of licenses for performing economic operations, and dissolution or revocation of licenses for people with multiple offenses.