Ask the law: Can I be sued for my employer’s bounced cheques?

bounced cheques
bounced cheques
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Question:  I am a manager in a limited liability company. For two years, the company has been incurring huge losses and has many debts in favour of more than one bank. My question, what is the legal way out to get rid of these debts? Am I responsible with my own money for the company’s debts? Is it possible to file a criminal case by the creditor banks against me because of my signature on the security cheques? Please advise.


I would advise the questioner that:

(1) You can liquidate the company and the assets of the company with all its properties will be used to pay the debtors.

Article 308- of the UAE Commercial Companies Law states that (If the losses of a Limited Liability Company reach half of the capital, the managers shall refer the dissolution matter to the general assembly of the partners. The dissolution decision shall be passed by the majority prescribed for amending the Memorandum of Association of the Company. If the losses reach three quarters of the capital, the partners holding one quarter of the capital may request to dissolve the Company.)

(2) You are not responsible with your own money for the company’s debts, unless you committed any fraudulent acts as per Article 84 of the above law: (“Every manager in a Limited Liability Company shall be liable towards the Company, the partners, and the third parties for any fraudulent acts committed by such manager and shall also be liable for any losses or expenses it incurs due to abuse of power or violation of the provisions of any applicable law, the Memorandum of Association of the Company or the contract of his appointment or for any gross error made by the manager. Any provision in the Memorandum of Association or the contract appointing the manager in conflict with the provisions of this clause shall be deemed null and void.”)

(3) The cheques as per the UAE law is now treated as an execution document, not criminal; and the one who issued the cheque will be followed, not the one who signed it. So, as a manager, the cheque is supposed to be issued from the company’s account, not your personal account.

Issuing the cheque is considered a criminal act in case of the following:

• Ordering or asking the drawee, prior to due date, not to pay the value of a cheque he has issued, with the exception of the cases provided for in Articles (620) and (625) of this Law.

• Closing the account or withdrawing all available fund therein before issuing the cheque or before presenting the cheque for payment or if the account has been frozen. 

• Deliberately writing or signing the cheque in a way that makes it un-payable. Penalty shall double, in case of repetition.

Which means that if you committed any of the above acts, the bank will have the right to file a criminal case against you— as the one who signed the cheque.