RBI Compounds FEMA Violations By Apothecon Pharmaceuticals

The Reserve Bank of India (RBI) has issued a compounding order against Apothecon Pharmaceuticals Private Limited in connection with violations of the Foreign Exchange Management Act (FEMA).

Following the RBI’s order, the Enforcement Directorate (ED) has closed its investigation into the company. The ED had initiated the investigation after receiving credible information.

The probe revealed multiple violations related to foreign investment under FEMA, including delays in reporting foreign investment.

Also, failure to file FCGPR and FLA returns within the prescribed timeline, issuance of shares against foreign investment before or after the stipulated period, and allotment of shares without obtaining prior approval from the Central Government.

During the investigation, the company applied to the RBI for compounding of the violations.

After the required conditions were fulfilled, the ED issued a No Objection Certificate (NOC), enabling the RBI to proceed with the matter.

On July 6, 2026, the RBI settled the case by imposing a one-time compounding amount of Rs 40.52 lakh.

Following the payment of the amount, all further proceedings relating to these violations came to an end.

The ED clarified that FEMA is primarily a civil law.

In cases where violations are compoundable and do not involve concerns related to money laundering, terror financing or national security, it issues an NOC to encourage voluntary compliance.

Once the RBI completes the compounding process, the ED closes its investigation.

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