Investor Education and Protection Fund (IEPF)


Investor Education and Protection Fund

Q-What is Investor Education and Protection Fund (IEPF)?

 Investor Education and Protection Fund (IEPF) is a fund which is created by the central Government under section 125 of the Companies Act, 2013 for promotion of investors’ awareness and protection of the interests of investors.

 

 Q-What is Investor Education and Protection Fund (IEPF) Authority?

 For the administration of IEPF, Government of India has on 7th September 2016 established IEPF authority under the provisions of section 125 of Company Act 2013.

 The Authority is entrusted with the responsibility of:

ü  Administration of the IEPF

ü  make refunds of shares, unclaimed dividend, matured deposits/debentures etc. to investors

ü  to promote awareness among investors.

 

Let's discuss the provision of companies Act, 2013

Section 125

 (1) The Central Government shall establish a Fund to be called the Investor Education and Protection Fund (herein referred to as the Fund).

  

Q-What amount to be credited to the IEPF?

 The Following shall be credited to the Fund:-

 

(a)     the amount given by the CG by way of grants after due appropriation made by Parliament by law in this behalf for being utilised for the purposes of the Fund;

 

(b)    donations given to the Fund by the CG, SG, companies or any other institution for the purposes of the Fund;

 

(c)     the amount in the Unpaid Dividend Account of companies transferred to the Fund u/s 124(5);

 

(d)    the amount in the general revenue account of the CG which had been transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956, as it stood immediately before the commencement of the Companies (Amendment) Act, 1999, and remaining unpaid or unclaimed on the commencement of this Act;

 

(e)     the amount lying in the IEPF under section 205C of the Companies Act, 1956;

 

(f)     the interest or other income received out of investments made from the Fund;

 

(g)    the amount received u/s 38(4);


 Section 38 : Punishment for personation of acquisition etc. of securities

(4) The Amount received through disgorgement or disposal of securities under Section 38(3) shall be credited to IEPF.

 


 

 

 

 

 


(h)    the application money received by companies for allotment of any securities and due for refund;

 

(i)      matured deposits with companies other than banking companies;

 

(j)      matured debentures with companies;

 

(k)    interest accrued on the amounts referred to in clauses (h) to (j);

 

(l)      sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation for 7 or more years;

 

(m)  redemption amount of preference shares remaining unpaid or unclaimed for 7 or more years; and

 

(n)    such other amount as may be prescribed:

 

Exception: The amount referred to in clauses (h) to (j) shall not be form part of the Fund unless such amount has remained unclaimed and unpaid for a period of 7years from the date it became due for payment.

 

 

Q-For what purpose the fund is utilized?

 The Fund shall be utilized for:

 

(a)    the refund in respect of unclaimed dividends, matured deposits, matured debentures, the application money due for refund and interest thereon;

 

(b)   promotion of investors' education, awareness and protection;

 

(c)    distribution of any disgorged amount among eligible and identifiable applicants for shares or debentures, shareholders, debenture-holders or depositors who have suffered losses due to wrong actions by any person, in accordance with the orders made by the Court which had ordered disgorgement;

 

Explanation: The disgorged amount refers to the amount received through disgorgement or disposal of securities.

 

(d)   reimbursement of legal expenses incurred in pursuing class action suits under sections 37 and 245 by members, debenture-holders or depositors as may be sanctioned by the Tribunal; and

 

(e)    any other purpose incidental thereto, in accordance with such rules as may be prescribed:

 

However, the person whose amounts referred to in clauses (a) to (d) of section 205C (2) transferred to IEPF, after the expiry of the period of 7 years as per provisions of the Companies Act, 1956,

Ø  shall be entitled to get refund out of the fund in respect of such claims in accordance with rules made under this section.

 

 

Q- How can any person claim fund?

 (4) Any person claiming to be entitled to the amount may apply to the IEPF authority for the payment of the money claimed (in form IEPF-5 alongwith requisite documents)

 

Procedure to claim Refund

 

a.     
Download the form IEPF-5 from the website of IEPF (http://www.iepf.gov.in) for filing the claim for refund.

 

 

b.      After filling the form save it on your computer and submit the duly filled form. On successful uploading an acknowledgement will be generated indicating the SRN.


 

 


c.      
Take a printout of the duly filled IEPF-5 and the acknowledgement issued after uploading the form.

 

 

d.      Submit indemnity bond in original, copy of acknowledgement and self-attested copy of e-form along with the other documents as mentioned in the Form IEPF-5 to Nodal Officer (IEPF) of the company at its registered office in an envelope marked "Claim for refund from IEPF Authority".


 

 


e.       Claim forms completed in all aspects will be verified by the concerned company and on the basis of company's verification report, refund will be released by the IEPF Authority in favor of claimants' Aadhaar linked bank account through electronic transfer.

 

 Administration of Fund:

 

(5) The CG shall constitute an authority for administration of the Fund, by notification, consisting of a chairperson and such other upto 7 members and a chief executive officer, as the Central Government may appoint.

 

(6) The manner of administration of the Fund, appointment of chairperson, members and chief executive officer, holding of meetings of the authority shall be in accordance with such rules as may be prescribed.   

 

(7) The CG may provide to the authority such offices, officers, employees and other resources in accordance with such rules as may be prescribed.

 

(8) The authority shall administer the Fund and maintain separate accounts and other relevant records in relation to the Fund in such form as may be prescribed after consultation with the Comptroller and Auditor-General of India.

 

(9) It shall be competent for the authority constituted under sub-section (5) to spend money out of the Fund for carrying out the objects specified in sub-section (3).

 

(10) The accounts of the Fund shall be audited by the Comptroller and Auditor- General of India at such intervals as may be specified by him and such audited accounts together with the audit report thereon shall be forwarded annually by the authority to the Central Government.

 

(11) The authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before each House of Parliament.


For better understanding, you can watch a video on this topic: https://youtu.be/HkipRud1-3c

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Do write for any Queries/suggestions and to get a free PDF copy of the above text mail me at bhuwantaragi@gmail.com

  

 

Disclaimer: The information contained herein is not intended to be a source of advice and it is only for the convenience of the user. The contents of this article have been prepared in accordance with the relevant provisions and information available at the time of preparation and the views and opinions expressed in this article are those of the author’s understandings. The author does not have any responsibility/liability of the same and the article cannot be quoted without the consent of the author.

 


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