Consequences of issuing a bad check to institutions

Consequences of issuing a bad check to institutions

Issuing a bad check in the name of your individual organization has serious consequences and direct legal liability for you as the owner of the organization. I will explain it to you in detail.

Legal liability of the owner of a sole proprietorship

In sole proprietorships, the financial liability of the corporation is the same as that of its owner. This means that any obligation on the Foundation is your personal obligation, and you are fully responsible for all of its debts and actions, including checks drawn up in its name. There is no legal separation between your own money and the institution’s money.

Penalty for issuing a check without balance

The crime of issuing a check without funds is considered a criminal offense that is strictly punishable by the Saudi regime. According to Article (118) of the Commercial Papers Law, the penalties for anyone who commits one of the following acts in bad faith include imprisonment for a period not exceeding three years and a fine not exceeding fifty thousand riyals, or one of these two penalties:

1. If you withdraw a check that has no existing, withdrawable payment, or the payment is less than the value of the check.
2. If you redeem after giving the check in exchange for payment or some of it so that the rest no longer meets the value of the check.
3. If you order the drawee bank not to pay the value of the check (except in cases specified by law).
4. If you intentionally write or sign the check in a way that prevents it from being cashed.
5. If you show up or hand over a check knowing that it has no consideration to meet its value or that it is not cashable.

More importantly, paragraph (f) of the same article also punishes a beneficiary or holder who receives a check knowing that there is insufficient payment for it. This means that someone who took a check from you knowing they had no balance could face the same penalty.

Tighten the penalty

Article (118) stipulates that if you re-commit any of these crimes within three years from the date of your conviction for any of them, the penalty shall be increased to imprisonment for a period not exceeding five years and a fine not exceeding one hundred thousand riyals, or one of these two penalties.

Consequences

Based on Cabinet Resolution No. (75) of 1431 AH, the crime of a check without funds is considered a crime that requires arrest, and it is dealt with by criminal investigation officers and the Bureau of Investigation and Public Prosecution (currently the Public Prosecution), which means that criminal procedures begin as soon as the check is presented to the bank and there is insufficient funds.

For law and legal consultations..Contact the office of lawyer Abdul Majeed Al Rashid.