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

Meridian Exports Pvt Ltd, an Indian company, owns a sales office in Dubai. An officer of that office, while in Dubai, commits an act that contravenes a FEMA provision. Which statement about the territorial reach of FEMA, 1999 is correct?

FEMA extends to the whole of India and also applies to branches, offices and agencies outside India that are owned or controlled by a person resident in India. It also covers contraventions committed abroad by persons to whom it applies, so the Dubai office is covered.

  1. AFEMA applies only within the territory of India and cannot reach the Dubai office
  2. BFEMA extends to the whole of India and also applies to branches, offices and agencies outside India owned or controlled by a person resident in IndiaCorrect
  3. CFEMA applies to the Dubai office only if the Reserve Bank gives a special notification for it
  4. DFEMA applies only to the registered office and not to any foreign branch of an Indian company

Explanation

Section 1 provides that the Act extends to the whole of India and also applies to all branches, offices and agencies outside India owned or controlled by a person resident in India. It also covers contraventions committed outside India by persons to whom the Act applies. The option limiting FEMA to Indian territory ignores this extra-territorial application.

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