Investor Education and Protection Fund-Complete Overview
(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;
(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 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 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:
Comment: 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:
Comment: 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.
Comment:
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.
Note : Sub-Section (6) is
Notified - except with respect to the manner of administration of the Investor
Education and Protection Fund..
Note : Manner of administration
of the Investor Education and Protection Fund has been notified on 7th
September, 2016
*(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 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.
DISCLAIMER: THE ARTICLE IS BASED ON
THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE
PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT
FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.
THE AUTHOR – CS
DEEPAK SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN
BE REACHED AT CONTACTHHPRO@GMAIL.COM OR 9910248911.
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