RBI Issues Compounding Order For FEMA Violations In Myntra Case

(MENAFN- IANS) New Delhi, June 4 (IANS) The Reserve Bank of India (RBI) has issued a compounding order, under Section 15 of the Foreign Exchange Management Act, 1999 (FEMA), in the case of M/s Myntra Designs Private Limited, which has resulted in the termination of investigation against the company for alleged contraventions of the provisions of FEMA, with a fine of Rs 2.88 lakh, according to a statement issued by the Directorate of Enforcement (ED) on Thursday.

The order has been passed by the RBI after issuance of "no objection" by the Directorate of Enforcement, the statement said.

Section 15 provides a mechanism for individuals or companies to voluntarily admit to a violation of FEMA regulations, pay a penalty, and regularise the contravention without undergoing lengthy litigation or legal proceedings.

In this case, based on the credible information received, an investigation was taken up by ED for contraventions of FEMA, which included a delay in submitting annual performance reports (APRs) under Regulation 15(iii) of FEMA (Transfer or Issue of Any Foreign Security) Regulations, 2004, involving an amount of Rs 42.85 crore. The company, also in breach of regulations, undertook a financial commitment by way of overseas direct investment pending submission of APRs under the Regulation, covering Rs 3.03 crore.

Under FEMA guidelines, submission of an APR (Annual Performance Report) is a mandatory yearly compliance for any Indian resident or entity holding Overseas Direct Investment (ODI). It requires reporting the financial and operational health of foreign joint ventures or wholly owned subsidiaries to the RBI.

The case was under investigation while the company filed an application before the RBI for compounding of the said contraventions under FEMA as per the provisions of Section 15 of the Act. On reference from the RBI, the ED issued no objection for such compounding in line with the true spirit of the Act. Accordingly, the RBI, on the basis of no objection issued by ED, has compounded the said contraventions vide compounding order dated April 20, with a one-time payment of Rs 2.88 lakh, the statement added.

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