On May 7, Israeli forces seized the main border crossing at Rafah, closing a vital route for aid into the besieged area
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Q- My father is a shareholder in the share capital of a limited liability company (LLC) incorporated in the UAE. He has a debt of approximately Dh700,000 for the loans/facilities availed from a bank by the LLC. The company has been incurring loss in business and therefore, he is unable to repay the loan to the bank. What could be the consequences if he is unable to make the payment or if the cheque is dishonoured?
Answer: In the event of non-repayment of loan/facilities amount, the bank may proceed by filing civil proceedings against the LLC before the courts of competent jurisdiction for recovery of the unpaid loan/facilities amount. The bank may also file a criminal complaint for dishonour of a cheque.
Upon dishonour, the bank may lodge a criminal complaint against the signatory of a cheque with the public prosecution or at the police station having jurisdiction in accordance with Article 401 of Federal Law No. 3 of 1987 on issuance of Penal Code (the "Criminal Law') of UAE which states: "Detention or a fine shall be imposed on anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.
The same penalty shall apply to anyone who endorses a cheque in favour of another or gives him a bearer draft, knowing that there is no sufficient balance to honour the cheque or that it is not drawable."
In view of the aforesaid, the public prosecution or the court shall decide whether to impose a fine or imprisonment or both against the signatory of the cheque.
Further, based on the aforementioned dishonoured cheque, loan/facilities sanction letters, loan documents, facilities agreements and outstanding bank statements of the borrower, the bank may initiate a commercial proceedings against the borrower for non-repayment of the loan/facilities under the provisions of Federal Law No. 18 of 1993 on the Issuance of The Commercial Transactions Law. In the event the borrower is not able to re-pay the debt in accordance with the judgment of the court, the court shall commence execution proceedings against the LLC and eventually against the shareholder of the LLC.
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