Introduction

The Central Government created the Investor Education and Protection Fund (IEPF) to secure shareholders’ rights and inform people. Section 125 of the Companies Act of 2013 governs it (the “Act”). The investor education and protection fund authority collects and deposits undisclosed or unclaimed monies from a company’s investors. 

INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY ADMINISTRATION AND REGULATION 

The investor education and protection fund authority is administered by the investor education and protection fund authority, which consists of a chairman, a chief executive officer, and up to 7 other officials appointed by the Central Government. The IEPF Authority oversees the IEPF resources and keeps accounting records and other relevant documentation as necessary after conferring with the Comptroller and Auditor-General of India. The sums gathered to the investor education and protection fund authority in line with the Act’s provisions are the revenues of the IEPF.

The investor education and protection fund authority should only use and distribute investor education and protection fund authority for the reasons laid forth in the Act. The CAG of India will analyze the IEPF’s records. Once a year, the investor education and protection fund authority will give the Central Government inspected finances and an independent audit.

The IEPF Board will also submit an annual report for every financial year, which would include a detailed explanation of its activities and will be sent to the Central Govt. The Central Government must present the investor education and protection fund authority financial statement, as well as the audit report of the CAG of India, to every House of Parliament.

Funds Deposited to the IEPF Fund

Underneath the Act, the relevant funds will be allocated to the IEPF:

• When House has granted the appropriate funds for them to be utilised for the objectives indicated in the Act, the sum granted by the Central Government as grants.
• The federal government, companies, state governments, and other organisations make donations to the IEPF for use in compliance with the Act’s stipulations.
• The sum is moved to the investor education and protection fund authority from a company’s unpaid dividend account after it has been unpaid/unclaimed for seven years from the transfer date. The IEPF will receive the unpaid dividend account amount as well as any accrued interest.
• Those stocks where a dividend has still not been issued or received for 7 years or more have to be transferred to the investor education and protection fund authority, along with a statement describing the facts.
• Per Section 205A(5) of the Companies Act, 1956, an amount was allocated to the Central Government’s general revenue fund that was unpaid or unpaid at the moment the Companies Act, 2013 was adopted.
• The money kept in the Investor Education and Protection Fund is exempt from taxation under Section 205C of the Companies Act, 1956. (IEPF).
• The interest or other income generated by the investor education and protection fund authority‘s investments.
• The company is owed a return of the application costs collected upon stock allocation.
• Deposits that had matured with companies other than banks went unreported and unacknowledged for 7 years after they were scheduled to be refunded.

How IEPF Amount is Utilized

The IEPF Authority should only use and utilize investor education and protection fund authority for the specified objectives, per the Act: 

• Refunds for mature debt securities, deposits, unclaimed profits, and the application money that is due for repayment and its interest.
• Investor education, training, and security are all encouraged.
• Per Sections 37 and 245 of the Statute, the National Company Law Tribunal has allowed compensation of lawyer expenses spent by debenture holders, shareholders, or investors in filing class-action lawsuits.
• The disintegrated cash is delivered to recognized and authorized candidates for debentures or shares, debenture holders, shareholders, or depositors who have suffered losses as a result of any person’s misconduct, according to court rulings of disgorgement. The disgorged amount is the money received through the sale or disgorgement of securities.
• Any additional goal that isn’t connected to the ones listed above.

What Are The Refund of Amounts Credited to IEPF

Any person or shareholder whose unpaid or unclaimed money has been shifted by the corporation from the unpaid dividend account to the IEPF will be reimbursed by the investor education and protection fund authority. According to Section 125(3)(a) of the Law and Regulation 7(1) of the Investor Education and Protection Fund Authority (Finance, Auditing, Moving, and Compensation) Regulations, 2016, they can seek a refund.

The company deposits the outstanding or unfilled funds of the shareholders in the unpaid dividend account to the IEPF for the following seven years. Shareholders, on the other hand, can submit Form IEPF-5 to the IEPF Authority to obtain a refund of their payments to the IEPF. They must submit the necessary documents, as well as Form IEPF-5, in order to get compensation.

Stock holders should fill out Form IEPF-5 on the IEPF website to obtain payment for unclaimed funds. They must fill out the form, upload it to the IEPF website, and email it to the company’s Nodal Officer (IEPF) at corporate headquarters together with the necessary paperwork.

The documents and the Form IEPF-5 will be verified by the relevant company. Depending on the firm’s verification report, the IEPF Board will digitally communicate the refund to claimants’ (shareholders’) Aadhaar-linked investment accounts.