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The Central Government introduced the Investor Education and Protection Fund (IEPF) to protect investors’ interests and promote awareness. It is established under Section 125 of the Companies Act, 2013 (‘Act’). The unpaid or unclaimed amounts belonging to a company’s investors are pooled and credited into the IEPF. The IEPF funds are utilised for various purposes as provided under the Act.
The IEPF is administered by the IEPF Authority consisting of a chairperson, a chief executive officer and such other members, not exceeding seven, appointed by the Central Government. The IEPF Authority administers the IEPF funds, maintains separate accounts and other relevant records relating to the funds as prescribed after consultation with the Comptroller and Auditor-General of India. The funds of the IEPF is the amount accumulated/credited to the IEPF as per the provisions of the Act.
The IEPF Authority will utilise and spend the money of the IEPF funds only for the purposes mentioned in the Act. The Comptroller and Auditor-General of India will audit the accounts of the IEPF. The IEPF Authority will forward the audited accounts with the audit report annually to the Central Government.
The IEPF Authority will also put together its annual report for every financial year, giving a complete summary related to its activities during the year and forward the copy to the Central Government. The Central Government will lay down the annual report by the IEPF Authority and the audit report given by the Comptroller and Auditor-General of India before each House of the Parliament.
The Act provides that the following amounts will be credited to the IEPF:
The Act provides that the IEPF Authority will utilise and spend the IEPF amount only for the following purposes:
Any person or shareholder whose unpaid or unclaimed amount has been transferred by the company from the unpaid dividend account to the IEPF can claim their refunds from the IEPF Authority. They can claim the refund as prescribed under Section 125(3)(a) of the Act and Rule 7(1) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
The company transfers the unpaid or unclaimed amounts of the shareholders remaining in the unpaid dividend account for seven years into the IEPF. However, the shareholders can claim a refund of their amounts transferred to the IEPF by filing the Form IEPF-5 with the IEPF Authority. They must submit the required documents along with Form IEPF-5 to receive refunds.
The shareholders can apply the Form IEPF-5 for the refund of their unclaimed money on the IEPF website. They must fill the form, upload it on the IEPF website, and submit the required documents to the company’s Nodal Officer (IEPF) at its registered office.
The concerned company will verify the Form IEPF-5 and the documents. The IEPF Authority will release the refund in favour of claimants’ (shareholders’) Aadhaar linked bank account through electronic transfer based on the company’s verification report.
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