Complied AI Back to law library Reading nowCompanies Act, 201330 chapters · 517 sections

Chapters30

Section 125Chapter 8

Investor Education and Protection Fund

Regulation 61 of LODR

(1)

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

(2)

There shall be credited to the Fund—

(a)

the amount given by the Central Government 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 Central Government, State Governments, 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 under sub-section (5) of section 124;

(d)

the amount in the general revenue account of the Central Government which had been transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956 (1 of 1956), as it stood immediately before the commencement of the Companies (Amendment) Act, 1999 (21 of 1999), and remaining unpaid or unclaimed on the commencement of this Act;

(e)

the amount lying in the Investor Education and Protection Fund under section 205C of the Companies Act, 1956 (1 of 1956);

(f)

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

(g)

the amount received under sub-section (4) of section 38;

(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 debenture 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 seven or more years;

(m)

redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; and

(n)

such other amount as may be prescribed:

Proviso

Provided that no such amount referred to in clauses ( h ) to ( j ) shall form part of the Fund unless such amount has remained unclaimed and unpaid for a period of seven years from the date it became due for payment.

(3)

The Fund shall be utilised 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;

(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:

Proviso

Provided that the person whose amounts referred to in clauses ( a ) to ( d ) of sub-section (2) of section 205C transferred to Investor Education and Protection Fund, after the expiry of the period of seven years as per provisions of the Companies Act, 1956 (1 of 1956), shall be entitled to get refund out of the fund in respect of such claims in accordance with rules made under this section.

Explanation

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

(4)

Any person claiming to be entitled to the amount referred in sub-section (2) may apply to the authority constituted under sub-section

(5)

for the payment of the money claimed .

(5)

The Central Government shall constitute, by notification , an authority for administration of the Fund consisting of a chairperson and such other members, not exceeding seven 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 Central Government 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 after consultation with the Comptroller and Auditor-General of India 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. (Notified with effect from 07/09/2016)

Notes, amendments & references (9)

Refer Rule 3, Rule 5 Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 . To view the rule, Click Here

Refer Rule 7 Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 . To view the rule, Click Here

Refer Rule (1)-(14) of the Investor Education and Protection Fund Authority (Appointment of Chairperson and Members, holding of meetings and provision for offices and officers) Rules, 2016. To view the rule, Click Here

Chief Executive Officer means an officer of a company, who has been designated as such by it

Refer Rule 8 Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 . To view the rule, Click Here

Refer Rule 9 Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and IEPF Authority (Recruitment, Salary and other Terms and Conditions of Service of General Manager and Assistant General Manager) Rules, 2017 . To view the rule, Click Here

Refer Rule 4 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 . To view the rule, Click Here

Refer Rule 10,11,12 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 . To view the rule, Click Here

sub-section (8) to (11) notified vide notification dated 05.09.2016.To view the notification, Click Here