Dishonoured Cheques (Offences) Bill, 2023 (SB. 10)

What Is This Policy?

The Dishonoured Cheques (Repeal & Re-enactment) Bill 2023 is Nigeria's legislative response to modernise and strengthen the legal framework governing cheque fraud. It repeals the outdated Dishonoured Cheques (Offences) Act 1977 and replaces it with a more comprehensive statute that criminalises the deliberate issuance of dishonoured cheques, expands the grounds for liability, raises financial penalties to reflect current economic realities, and widens court jurisdiction to improve access to justice for victims across all states of the Federation. The bill operates under the framework of the 1999 Constitution of Nigeria and seeks to repeal the Dishonoured Cheques (Offences) Act 1977.

Replace mandatory imprisonment with a flexible sentencing regime offering fines as an alternative to custodial sentences reducing strain on the criminal justice system Impose proportionate financial penalties on corporate offenders, calibrated to company size, replacing the outdated flat-rate sanctions Extend the limitation period for presenting a cheque from three months to six months, reducing the incidence of time-bar injustice for payees Empower State High Courts and Magistrate Courts to try dishonoured cheque offences, bringing justice closer to the people Establish a formal Notice of Dishonour mechanism requiring banks to promptly notify drawers and payees, enabling pre-litigation resolution Enable courts to order full restitution of cheque value and property to victims, alongside criminal penalties

Who Does It Target?

Individuals and companies that issue or accept cheques as payment instruments. Bankers and financial institutions that process and honour cheque payments. Law enforcement and courts adjudicating cheque fraud cases. Victims of deliberately dishonoured cheques seeking restitution.

What Does It Aim to Achieve?

Modernise and strengthen Nigeria's legal response to cheque fraud by criminalising the deliberate issuance of dishonoured cheques on six grounds. Replace outdated 1977 sanctions with proportionate penalties for individuals and companies. Widen court jurisdiction to decentralise access to justice and require banks to issue formal notices of dishonour to enable pre-litigation resolution.

Key Features

Expanded Grounds for Offence: The Bill criminalises dishonour on six grounds: (1) no funds or insufficient funds (2) dormant or non-existent account (3) cheque value exceeds authorised limit (4) countermand or stop payment without payee notice (5) irregular mandate (6) any other deliberate act or omission by the drawer to obstruct payment. Revised Penalties: Individuals face up to two years' imprisonment, a fine of ₦500,000, or both. Small companies (turnover ≤ ₦20 million) face fines of ₦1,000,000. Large companies face fines of ₦5,000,000. These penalties replace the outdated 1977 sanctions. Six-Month Presentation Period: A cheque must be presented for payment within six months of its date extended from the three-month period in the 1977 Act to establish the offence of dishonour. Restitution Orders: Courts may, in addition to criminal penalties, order the repayment of the cheque value, restitution of property obtained, or compensation for the value of services obtained through the dishonoured cheque. Corporate Officer Liability: Directors, managers, secretaries, and agents of corporate bodies are personally liable where the offence is committed with their consent, connivance, or through their neglect making individuals within corporations personally accountable. Widened Court Jurisdiction: The Federal High Court, FCT High Court, State High Courts, and State Magistrate Courts all have jurisdiction to try offences significantly decentralising and democratising access to justice for victims. Formal Notice of Dishonour: Banks (drawees) are legally required to issue a Notice of Dishonour to the drawer within four days of dishonour, giving the drawer seven days from receipt to redeem the cheque. Banks failing to comply face a fine of ₦500,000. Good Faith Defence: A drawer who can prove to the court that, at the time of issuing the cheque, they had reasonable grounds to believe it would be honoured is not guilty of an offence under the Bill.

Current Status

The Dishonoured Cheques (Offences) Bill, 2023 is under consideration by the National Assembly.

Legal Framework

The bill operates under the framework of the 1999 Constitution of Nigeria and seeks to repeal the Dishonoured Cheques (Offences) Act 1977.