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CMA Final · Corporate and Economic Laws · Foreign Exchange Management Act, 1999

Under Section 1 of the Foreign Exchange Management Act, 1999, which of the following statements about its application is correct?

FEMA extends to the whole of India and also applies to all branches, offices and agencies outside India that are owned or controlled by a person resident in India. It further covers contraventions committed outside India by any person to whom the Act applies.

  1. AIt applies only to persons and transactions within the territory of India
  2. BIt also applies to branches, offices and agencies outside India owned or controlled by a person resident in IndiaCorrect
  3. CIt applies only to companies registered in India and not to individuals
  4. DIt applies outside India only to the branches of banks

Explanation

Section 1(3) states that the Act also applies to all branches, offices and agencies outside India owned or controlled by a person resident in India, and to contraventions committed outside India by persons to whom the Act applies. The option limiting it to Indian territory ignores this extra-territorial reach.

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