RBI compounds FEMA violations in Apothecon Pharmaceuticals case
The Reserve Bank of India has issued a compounding order for Apothecon Pharmaceuticals to resolve FEMA violations, leading to the closure of an Enforcement Directorate investigation. This process is intended to encourage voluntary compliance and reduce litigation.
Why it matters
The case illustrates the regulatory mechanism for handling foreign exchange violations and the government's push for ease of doing business.
The Reserve Bank of India (RBI) has issued a compounding order in the case of Apothecon Pharmaceuticals Private Limited, which has resulted into closure of investigation against the company by the Enforcement Directorate under the Foreign Exchange Management Act (FEMA).
The compounding order for one-time payment of ₹40,52,622 was passed on July 6 after issuance of a “no objection certificate (NOC)” by the ED, which was probing multiple FEMA violations, said the Directorate.
“In this connection, it may be noted that as a matter of policy, the Enforcement Directorate issues an NOC where the contravention is eligible for compounding, the prescribed conditions are fulfilled and no investigation or other legal impediment exists. This facilitates voluntary compliance, reduces avoidable litigation and promotes ease of doing business,” it said.
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