Investor Education and Protection Fund (IEPF) has been established to guard the interests of investors in securities and to promote the development of and to regulate the securities market under the provision of the Companies Act, 2013. The funds credited to IEPF are maintained under the Consolidated Fund of India. The Fund is also used for distribution of any disgorged amount among eligible applicants for shareholders, debenture-holders or depositors who have undergone losses due to someone's wrong activities, following the rules made by the Court. A disgorgement order is issued when an entity in the securities market makes a profit by crooked means.

The Investor Education and Protection Fund are governed by the Investor Education and Protection Fund Authority established by the Government of India under the provisions of section 125 of the Companies Act, 2013. The Ministry of Corporate Affairs governs the authority. Recently, the Ministry of Corporate Affairs has issued a new set of rules, Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021, to amend the Investor Education and Protection Fund law, 2016. The main highlights of the circular are discussed below.

Insertion of the clause in Rule 3 sub-rule 2: Adding to the current list of gross amounts that must be credited to the fund (Rule 3 sub-rule 2), a new clause (fa) is inserted. The new clause states that each share held by the Authority under the provision of Section 90(9) of the Act and all the resultant profits emerging out of such shares must also be credited to the fund.

Insertion of new, Rule 6A- Manner of transfer of shares: According to the new rule 6A- Manner of transfer of shares under sub-section (9) of section 90 of the Act to the Fund, the shares must be credited to the DEMAT A/C of the Authority under 30 days of becoming due to be transferred. Also, such transfer of a share will be independent of any limitations and can't be claimed back. For the shares owned in electronic form, the Company must notify the depository and the depository must transfer shares in favour of the DEMAT account of the Authority. For the shares held in physical form, Company Secretary or the person authorized by the Board shall draft an application to the Company, for the issue of a new share certificate. On receiving the application, a new share certificate shall be issued.

Form IEPF-4: The Company must send a statement to the authority in Form IEPF-4 under 30 days of the corporate action taken including details of transfer along with a copy of the order of the Tribunal under Section 90(8) of the Act and notice that no application under Section 90(9) of the Act has been made or is pending before the Tribunal.

Form IEPF-7: Any amount needed to be credited by the Companies to the Fund shall be forwarded into the designated account of the IEPF Authority. The details must be provided to the authority in Form IEPF-7 within 30 days from the date of payment.

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