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

Anil, who lived in Canada as a non-resident, acquired shares of a Canadian company and a flat in Toronto. He later became resident in India. Which statement is correct under the Act?

Anil may hold, own, transfer or invest in both assets. Section 6(4) allows a resident in India to do so with foreign currency, security or immovable property acquired or held while resident outside India, which is an exception to the general bar in Section 4.

  1. AHe must dispose of both assets immediately since a resident cannot hold foreign security or foreign property
  2. BHe may hold, own, transfer or invest in them because they were acquired when he was resident outside IndiaCorrect
  3. CHe may hold them only with the prior order of the Competent Authority
  4. DHe may hold the shares but not the immovable property

Explanation

Section 6(4) permits a person resident in India to hold, own, transfer or invest in foreign currency, security or immovable property abroad if acquired or held while resident outside India, or inherited from a non-resident. This is the exception to the general bar in Section 4, and it covers both shares and property.

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