The Ministry of Corporate Affairs has issued a notification S.O. 125(E), dated January 13th, 2016, wherein it has notified the following provisions of subsection (5), sub-section (6) [except with respect to the manner of administration of the Investor Education and Protection Fund] and sub-section (7) of section 125 of the Companies Act, 2013 shall come into force. Section 125 of Companies Act, 2013 deals with Investor Education and Protection Fund wherein the above said sub-sections (5), (6) and (7) deal with constituting an authority for administration of the Fund, appointment of its chairperson, members and chief executive officer, and Central Government providing to such authority offices, officers, employees and other resources.
Further, in exercise of powers conferred by sub-section (5), sub-section (6) and sub-section (7) of section 125 of the Companies Act, 2013, the Central government has also issued Investor Education and Protection Fund Authority (Appointment of Chairperson and Members, holding of meetings and provision for offices and officers) Rules, 2016.
IEPF Authority would advise the central government on issues related to investors' interest. IEPF Authority shall be set up under the Companies Act, 2013 for administration of the Investor Education and Protection Fund. It shall consist of a Chairperson, six members and a Chief Executive Officer. As per the Rules, the Secretary of Ministry of Corporate Affairs shall be the ex-officio Chairperson of the Authority, and the Chief Executive Officer shall be the convenor of the Authority. Also, the members would include one representative each from RBI and SEBI as ex-officio members, and four persons having special knowledge and experience of not less than fifteen years, in finance, management, accountancy or law with one person from each discipline and such person shall have special knowledge, or professional experience, which shall in the opinion of the Central Government shall be useful to the Authority.
The functions of the Authority state the duty to administer the Fund for Investor Education and Protection. The Authority may constitute permanent Committees for overseeing its functions. Schedule II of the Rules prescribes functions for the following Functional Divisions of the Authority:
1. Administration: For administrative functions necessary or deemed expedient for fulfilling the objects of the Fund.
2. Investment/ Funds Management: For maintaining funds standing to the credit of Fund and investing the same in interest bearing account of any nationalized bank. Also, for opening of depository account of authority and transferring securities of investor.
3. Claims and Settlement: For making refunds to eligible investors, distribution of disgorged amount in consultation with Legal and Enforcement Division and as per court's order or the Authority's order, to eligible and identified security holders who have suffered losses due to any wrong actions of any person in accordance with the order of Tribunal or order of the Authority, as the case may be.
4. Legal and Enforcement: For initiation and handling of disputes and legal cases arising out of claims or settlement or any other dispute.
5. Investor Education and Protection:
(i) Registering associations or institutions or professional bodies or chambers of commerce and industry or other organizations engaged in investor education and protection activities.
(ii) Sanctioning grants to the registered entities for seminars, programmes, projects or activities in the field of corporate governance, Investors' Education and Protection including research activities.
(iii) Monitoring of the utilisation of the grants to ensure the achievements of the objectives of the sanctioning of the grants.
(iv) Cooperating and collaborating with institutions engaged in Investor Education, corporate governance, awareness, and protection activities.
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