Prominent amendments to the provisions of the Commercial Transactions Act No. 18 of 1993 (the “Commercial Transactions Law”) by Decree of Federal Law No. 14 of 2020
The decree, in respect of the amendments to the Commercial Transactions Law, was issued by Federal Law No. 14 of 2020 and was published in the Official Gazette in the issue of September 30, 2020. In light of the decree certain provisions of the Commercial Transactions Law have been amended whereas certain other provisions have been abolished. Further the amendments to the Commercial Transactions Law has also introduced the addition of certain provisions. The most pertinent and key highlights of the above-mentioned amendments are as follows:
Amended Provisions of the Commercial Transactions Law:
Cheques with insufficient balance can be submitted to the bank for accreditation - Article 600
This article, following the amendment, now stipulates the circumstances in which the payer or holder of the cheque, submits the cheque to the bank for accreditation. Cheque accreditation in this context means stamping of the cheque by the issuing bank, specifying the account balance being sufficient or insufficient. As per the amendment, the balance in the relevant account remains frozen with the bank in the interest of the bearer until the expiry of the dates of cheque submission. Hence in light of the amended Article 600, submission of a cheque for the purposes of accreditation is possible even if the balance in the relevant account is insufficient.
Bank is obliged to pay cheques that have insufficient balance - Article 617
The amendment obliged the bank to meet the value of the cheques, which do not have an adequate exchange, within the limits of the available balance, unless the holder refuses to do so. The bank must stamp on the back of the cheque mentioning the partial amount, hand over the origin of the cheque and a certificate of such for the cheque holder; however, the holder has the right for claiming the remaining amount. On the other hand, the amendment is obliged the bank to notify the Central Bank of such. And aaccording to the amendment of Article 641, the bank shall be punished by a fine of not less than 10% of the value of the cheque, which is minimum of AED 5,000, and not more than twice the value of the cheque when refraining from partial payment, issuing a certificate of such, or handing the origin of the cheque.
Withdrawal of cheque book - Article 643
The amendment to this article authorizes the court to levy a penalty for withdrawing the cheque book of a convicted person when convicted of one or more crimes of relating to cheques.
The amendment stipulates a maximum period of five (5) years for the issuance of new cheque books for convicts of crimes relating to cheques. The amendment also imposes a fine of not less than AED 50,000/- and not more than AED 100,000 where the convict failed to hand over cheque book(s) to the bank within 15 days of being notified. The bank is also punishable by a fine of not less than AED 100,000 and not more than AED 200,000 where the violation of this Article 643 has been committed by the bank.
Newly Added Provisions in the Commercial Transactions Law
Bounced Cheque is an executive deed - Article 635 bis
According to this newly promulgated Article 635, a bounced Cheque is considered an executive deed, meaning thereby that the holder of such cheque shall have the right to request for enforcement (either wholly or partially) in respect of such cheque.
Cheque payer penalty - Article 641 bis (2)
According to this article, it is punishable by imprisonment of not less than six months and not more than two years, and a fine of not less than 10% of the value of the cheque amount, as a minimum of AED 5,000, and doesn’t exceed twice the value of the cheque or one of these penalties for who ordered the bank not to cash a cheque issued , close the account , withdraw all the balance before issuing the cheque or before submitting it for the bank, or if the account was frozen Or deliberately editing the cheque or signing it in a way that prevents it from encashing it. Article 641 also provides that the above-mentioned penalty will be doubled if the offence described above is repeated.
Article 643 bis (2)
This article authorizes the court to prevent a person who has been convicted with one of the aforementioned cheque crimes from practicing commercial or professional activity for a period not exceedingly more than 3 years when the crime was committed on the occasion of such activity.
Legal person's punishment - Article 644 bis (1)
This article stipulates the event when committing crimes of cheques on behalf of the legal person. The legal representative shall be punished only if he has known of the crime or committed it for the benefit of himself or others. In the case where the legal representative is not responsible, the legal person shall be punished with a fine not less than double as the fine legally prescribed for the crime and not exceed five times the fine of the offence. The license of the legal person may be suspended for a period of not more than six months. In case of the repetition, the license must be revoked, or the legal person must be dissolved; However, the judgment shall be published in newspapers or electronic publishing.
It should be noted that the decree of the aforementioned Federal Law has completely abolished Articles 401, 402, and 403, of the Commercial Transactions Law, relating to the crimes of cheques stipulated in the Federal Penal Code No. 3 of 1987, in addition to abolishing any provision that contravenes this law.