CYPRUS: Guidance from the Supreme Court on the responsibility of directors of companies as to the issue of unpaid cheques
In the particular case the First Instance Court ruled that the Defendant No.1 company was guilty for the offense it was charged with, particularly Section 305A of the Criminal Code as the company had issued a cheque which had been unpaid when presented for payment whilst on the other hand it ruled that Respondent No.2 was not guilty since during the material time of the issuance of the cheque she did not have the mens rea of intention, in the non-payment of the cheque. The Respondent No.2 was one of the Defendants on the basis of her capacity as the director of Defendant No.1 company who was considered to have assisted and/or prompted the Defendant No. 1 company to issue the disputed cheque, which was returned as unpaid.
It had been stated amongst others by the First Instance Court that as per Section 305A of Cap 154, the responsibility lies within the issuer of the cheque who in this case is the Defendant No.1 company itself and not Defendant No.2 as the director or as the person who has signed the said cheque, who is considered as the representative of the company. Therefore it came to this finding by relying on various English cases including the First Instance Judgment in the case of Bodina Ltd v. Rollaway Shower Blinds Ltd (1986) 1 W.L.R. 517 where it was held that the directors of the company who signed the cheques did not have personal responsibility, but rather that responsibility lies on the company itself which remains the issuer of the particular cheque.
Without going into detail, the Supreme Court overturned the decision by the First Instance Court ruling as follows:
“In the light of the above, we are of the view that Respondent No. 2, with full knowledge of the material facts at the material time of the issue in question, and with indifference or recklessness as to whether the cheque in question which she had blindly signed and which was implemented with her consent, would eventually be honored when it was present for payment, provided assistance to Defendant No.1 company to commit the offense under Article 305A and therefore she is guilty of the offense under article 20(c) of the Criminal Code particularly in aiding and abetting another person in committing the particular offense.”
For further information on this topic please contact
Ms. Nada Starovlah (nstarovlah@pittaslegal.com) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
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