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

Zenith Securities is a company and an authorised person. During an RBI inspection under the Act, the inspecting officer asks for books, accounts and documents. The managing director says only the company, not individual directors, has to respond. Which position is correct?

Every director, partner or other officer of the company, along with the authorised person itself, must produce the required books, accounts and documents and furnish information. They must do so within the time and in the manner the inspecting officer directs. Directors are therefore not exempt.

  1. AOnly the company must comply; directors are exempt
  2. BOnly the inspecting officer's superior may demand documents
  3. CEvery director, partner or other officer of the company must also produce the documents and information required within the time and manner directedCorrect
  4. DCompliance is voluntary unless a penalty is first imposed

Explanation

The duty to produce books, accounts and documents and to furnish information lies on every authorised person and, where it is a company or firm, on every director, partner or other officer. The officer directs the time and manner. So the managing director's position is wrong.

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