INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

What is Investor Education and Protection Fund?

There are various steps taken by the central government of India under the scheme of the Investor Education and Protection Fund (IEPF).

There is a monologue issued by the government to aware the investors i.e.

“Mutual Fund investments are subject to market risks, please read the offer document carefully before investing”.

Section 125 of Companies Act, 2013 deals with Investor Education And Protection Fund. Investor Education and Protection Fund were set up under section 205 C of the Companies Act 1956 by way of the company’s amendment act 1999 to promote investors' awareness and protection of investors’ interest.

The earnings from the fund are used for—

1.    Refund of unclaimed dividends

2.    refund of unclaimed dividends, matured deposits, matured debentures.

3.    For Refund of application money due for refund and interest.

4.    Promotion of investors' education, awareness, and protection.

5.    Payment of disgorged amount to applicants in accordance with disgorgement orders made by the court.

6.    Reimbursement of legal expenses by members, debenture holders or depositors. incurred in pursuing cases sanctioned by a tribunal under sec 37 and 245 of companies act 2013.

From where IEPF get funds? –

1.    The number of grants by the central government

2.    The donation was given by the central government, state government, companies or other institutions.

3.    Unpaid dividend account of the companies transferred to the fund under subsection 5 of section 124.

4.    Amount lying in the investor Education and Protection Fund under section 205 C of the companies’ act 1956

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

6.    Any application money received by companies for allotment of any securities and due for a refund;

7.    Interest accrued on the amounts referred to in clauses (h) to (j);

8.    Redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; and

9. another amount as may be prescribed:

Where IEPF funds are utilized—

1.    The refund in respect of unclaimed dividends, matured deposits, matured debentures, the application money due for refund and interest thereon;

2.    Promotion of investors’ education, awareness, and protection;

3.    According to the order made by the court, circulation of any ejected amount among appropriate and identifiable applicants for shares, shareholders, debenture-holders or depositors who have suffered losses due to wrong actions by any person;

4.    Repayment of legal expenses sustained in rushing class exploit suits under sections 37 and 245 by members, debenture-holders or depositors as may be authorized by the Tribunal; and

5.    Any other purpose incidental thereto, in accordance with such rules as may be prescribed.

Investor Education and Protection Fund Authority—

Sub-section (5) (6) and (7) of section 125 of companies act 2013 conferred the power that the central government shall constitute an authority through Investor Education and Protection Fund Authority rules 2016, notified on 13th January 2016. IEPF Authority is answerable for the administration of IEPF; educating investors about reasonable and safe investing; repayments of shares, unclaimed dividends, matured deposits/debentures to investors.

Configuration of Authority—

1.    The Authority shall contain e following, i.e.: -

a.    Chairperson

b.    maximum of seven members

c.    Chief Executive Officer

2.    The convenor of the Authority shall be the Chief Executive Officer.

Investors awareness program—

IEPF organizes Investor awareness programs from time to time to make investors aware of their investments. Programs are thought in association with Professional Institutes (PI), Educational institutes, local trade & business chambers.

Author:

eStartIndia Team