Page 63 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes (b) he or either of his parents or any of his grandparents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act of 1955; or
(c) the person is a spouse of an Indian citizen or a person referred to in (a) and (b).
Convertible currency/Hard currency. Certain currencies are freely convertible i.e. one can
exchange these currencies with any other currency without any restriction. Major among these
are: Dollars (USA), Pound Sterling (UK), Euro (European Common Currency), Deutsche Mark—
DM (Germany), Yen (Japan), Franc (France), Lira (Italy) etc. This is often called ‘hard currency’.

3.2 Provisions relating to an Authorised Person

Authorised Person

Sec.10 provides that the Reserve Bank may, on an application made to it in this behalf, authorise
any person to be known as authorised person to deal in foreign exchange or in foreign securities,
as an authorised dealer, money changer or offshore banking unit or in any other manner as it

deems fit. The authorization shall be in writing and shall be subject to the conditions laid down
therein. An authorization so granted may be revoked by the Reserve Bank at any time if it is

satisfied that (a) it is in public interest to do so; or (b) the authorised person has failed to comply
with the condition subject to which the authorization was granted or has contravened any of the

provisions of the Act or any rule, regulation, notification, direction or order made thereunder.
Duties of an Authorised Person

The duties of an authorised person as provided in the Act are summarised hereunder:

1. To comply with RBI directions [Sec.10(4)]. An authorised person shall, in all his dealings
in foreign exchange or foreign security, comply with such general or special direction or
order as the Reserve Bank may, from time to time, think fit to give.

2. Not to engage in unauthorized transactions [Sec.10(4)]. Except with the previous permission
of the Reserve Bank, an authorised person shall not engage in any transaction involving
any foreign exchange or foreign security which is not in conformity with the terms of
authorization under this section.
3. To ensure compliance of FEMA provisions [Sec.10(5)]. An authorised person shall, before
undertaking any transaction in foreign exchange on behalf of any person, require that person
to make such declaration and to give such information, as will reasonably satisfy him that
the transaction will not involve and is not designed for the purpose of any contravention or
evasion of the provisions of this Act or of any rule, regulation, notification, direction or order

made thereunder. Where the said person refuses to comply with any such requirement
or makes only unsatisfactory compliance therewith, the authorised person shall refuse in
writing to undertake the transactions and shall, if he has reason to believe that any such
contravention or evasion as aforesaid is contemplated by the person, report the matter to
the Reserve Bank.

Powers of the Authorised Person

1. To deal in or transfer any foreign exchange or foreign security to any person [Sec.3(a)]
2. Receive any payment by order or on behalf of any person resident outside India in any
name. [Sec.3(c)]
However, an authorised person is not allowed to credit the account of any person without
any corresponding remittance from any place outside India.

58 LOVELY PROFESSIONAL UNIVERSITY