This article is written by Vaidha Sharma , pursuing a Diploma in Companies Act, Corporate Governance and SEBI Regulations from LawSikho.com. 

Introduction

Human desires and aspirations to want more and have more are never ending. ‘Money yields Money’ is the sound truth. There has been a constant tussle between to save or to invest, but to grow, to build wealth and to be financially more stable, the preferred option in the recent economic trend has been to invest. An investment could be in anything, it could be a business model, an idea, time, efforts or money with optimism of greater returns in years yet to come, than what was initially put in.

With more and more conglomerates and unique investing ideas there has been a shift from saving pattern to investment pattern. Investing in companies, in exchange provides return in form of dividends to the shareholders of companies, but sometimes due to ins and outs, some shareholders fails to encash the dividend for various reasons, such funds does not belong to the company nor is it claimed by shareholders, and as a jurisprudential preposition “ownership cannot be in abeyance” company law provides for the creation of Investor Education And Protection Fund(IEPF) so that the hard earned money of investors is not compromised.  

What is investor education and protection fund (IEPF)

Investor Education and Protection Fund (IEPF) is set up under Section 125 of Company Act, 2013. IEPF is a government body, i.e., it is not a company formed body nor it is regulated on separate standards among various companies as it mainly deals with all the unclaimed shares, deposits, dividends etc. Section 125 of the Act deals with (i) Amount which company needs to transfer to IEPF, (ii) utilisation of amount so transferred to IEPF and (iii) other related matters.

The main objective of IEPF is to endorse investors interest and also increase awareness and protection of investors. There are various reasons as to why some amount remains in abeyance which includes:

• No record of old, physical investments.
• Name or address changes.
• Loss of documents and old certificates; etc.

What is transferred to IEPF

Central government is the sole authority to establish IEPF. What shall be credited to the fund is exhaustively mentioned under Section 125 of Company Act, 2013 which includes shares and dividends which remains unclaimed for a consecutive period of 7 years or more as per provision of Company Act, should be transferred to Investor Education Protection Fund. Some of which includes:

1. Section 123 of the Act provides for Declaration of Dividends and Section 124 talks about Unpaid Dividend account which means that with declaration of dividend some shareholders fails to encash the same, the unclaimed dividend amount declared by the company will be transferred under Section 124(5).
2. Amount sanctioned by Central Government with specific purpose of being transferred to IEPF, after due appropriation made by Parliament by law.
3. Donations can be made to the fund by Central Government, State government, company or even other institutions.
4. Amount which is under Section 205C of Company Act, 1956 will also be transferred to IEPF.
5. Any investment, or any income from investment made out of IEPF will be transferred to the fund itself.
6. Amount received under Section 38 of the Act which speaks about amount received through disposal of security, by inducing a company whether directly or indirectly to allot or register transfer or securities to him or any other person in a fictitious name.
7. Application amount received by company for allotment and the amount is due for refund.  
8. General revenue account of central government transferred to account under Section 205A(5) of the old Act, as it was before commencement of 1999(Amendment) Act, and any remaining unclaimed fund at the beginning of this account.
9. Matured deposits other than banking companies.
10. Any amount remaining unpaid for more than 7 years, which was redemption amount for preference shares.
11. All shares as per Sec 124(6); etc.

Documents to be filed for investor education and protection fund

The whole objective of establishment of an IEPF is to protect the interest of the investor. Investor should claim dividends from the company on a regular basis because once the amount is transferred to IEPF it cannot be claimed in the routine manner. A specific procedure has to be followed which requires filing of some documents which includes:

1. Print out of claim form with claimant signature and in case of joint holders the form has to be signed by all the claimants.
2. Copy of Acknowledgement with SRN No. attested by claimant.
3. Advance stamped receipt.
4. Original certificate in case of matured deposits, debentures or bonds.
5. Copy of AADHAR card and PAN card.
6. Original share certificate in physical form.
7. In case joint holder is deceased, a copy of death certificate.
8. Proof of Entitlement.
9. Original cancelled cheque leaf.
10. Other documents;(if any optional document).

Requirements for filing IEPF related e-forms

Under the old Act of 1956, for the purpose of giving statements of unclaimed amount only one form was filed i.e.,1 INV, but with introduction of IEPF Rules, 2016, several forms are to be filed under the 2013 Act. These forms are to be filled in online mode and forms filled in physical manner are summarily rejected. The same is represented in the table below:

	E-FORM	PARTICULARS	TIME PHASE	ADDITIONAL REMARKS
1.	IEPF-1	Any amount which remains unclaimed for 7 consecutive years is required to be credited by the Company to IEPF. Also it shall be remitted online along with statement in form IEPF-1.	This amount has to be credited in the fund within 30 days of it becoming due.	Companies now can fill the new IEPF form-1, without attaching any Challan. Also companies now can remit the fund to be transferred online. Under old act of 1956 form 1INV was filed for the purpose.

Summary process of form IEPF-5

IEPF during the covid crisis

India is on the downward slope of economy, a rash hit due to the fearsome Covid-19 phenomenon has put Indian economy on reverse. This had in its grip not just small business which has succumbed to it but has also affected the working of company all across the globe; it was only fair to relax some of the provisions of Company Act for the company to get back on track after a hefty lockdown was lifted.

Ministry of corporate affairs in General circular dated 30th March, 2020, introduced one time settlement scheme relaxation in wake of COVID-19 which was “Companies Fresh Start Scheme, 2020 (CFSS)” which also includes provisions of Section 124 and 125 of the Company Act related to IEPF, which permitted delayed filing of several e-forms, without any additional fees up to 6 months from the expiry of 30 September, 2020. Another circular dated 28th September, 2020, Ministry of Corporate Affairs has further extended the timeline till 31st December, 2020. This relaxation is with regards to e-forms           IEPF- 1, IEPF-1A, IEPF-2, IEPF-3, IEPF-4 and IEPF-7.

Conclusion

In a major success move, deposits worth  Rs 1,514 crore has been transferred to government IEPF which was owed by Peerless General Finance and Investment  Company to its investors for more than 15 years. IEPF governed by Section 125 has been an inalienable arm of Company Act, for protecting the interest of the investors to make them more aware. The fund is managed by a committee formed by government. Utilisation of funds is done by conducting awareness programs, campaigns and educating investors how to be more responsible with investments so as to benefit in maximum capacity by their investments.

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