125. Investor Education and Protection Fund
(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, 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 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:
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:
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, 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 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.