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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

An RBI officer, specially authorised in writing, arrives to inspect the business of Kaveri Exchange Ltd, an authorised person company. Which of the following correctly states the duty under FEMA?

Under Section 12(2), the authorised person and, if it is a company or firm, every director, partner or other officer must produce the books, accounts and documents in their custody or power and furnish information as the inspecting officer requires, within the time and manner he directs.

  1. AOnly the company, not its directors or officers, must produce the books
  2. BEvery director, partner or other officer of the company must produce books, accounts and documents in their custody or power as the officer requiresCorrect
  3. CInspection is allowed only after the company has failed to furnish information
  4. DInspection is allowed only with prior Central Government approval

Explanation

Section 12(2) casts the duty on every authorised person and, where it is a company or firm, every director, partner or other officer, to produce books, accounts and documents and furnish information. Section 12(1) allows inspection at any time, including for verifying statements, not only after a failure to furnish.

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