INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY

[Mr. M. GOVINDARAJAN]

Authority

Section 125(5) of the Act provides for the constitution of an Authority for administration of the Fund.  The Authority shall consist of a Chairperson and such other members, not exceeding 7 and a chief executive officer, as the Central Government may appoint. 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 the Rules framed by the Central Government which is called as ‘Investor Education and Protection Fund Authority (Appointment of Chairperson and Members for holding of meetings and provision for offices and Officers) Rules, 2016 (‘Rule’ for short) which came into effect from 13.01.2016.

The IEPF Authority is entrusted with the responsibility of administration of the Investor Education Protection Fund (‘IEPF’ for short), making refunds of shares, unclaimed dividends, matured deposits/debentures etc., to investors, promoting awareness among investors, and protecting the interests of the investors.

Authority - a body corporate

The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal with power to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.

Composition of the Authority

The Authority shall consist of the following-

• Chairperson;
• Six Members;
• Chief Executive Officer.

The Chief Executive Officer shall be the convenor of the Authority.  The Secretary, Ministry of Corporate Affairs shall be the ex-officio Chairperson of the Authority.  The Central Government shall appoint a person to be the Chief Executive Officer of the Authority.

The Central Government may appoint the following as the members of the Authority-

• a person not below the rank of Executive Director to be nominated by the Reserve Bank  of India as ex-officio member;
• a person not below the rank of Executive Director to be nominated by the Securities  and Exchange Board of India as ex-officio member:
• 4 persons having special knowledge and experience of not less than 15 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, be useful to the Authority.

At present the Authority consists of-

• Shri Manoj Govil I Secretary, Ministry of Corporate Affairs - Chairperson - ex-officio;
• Smt. Anita Shah Akella I  Joint Secretary, - Ministry of Corporate Affairs - Chief Executive Officer;
• Shri Anil Kumar Sharma I - Executive Director, Reserve Bank of India - Member - ex-officio;
• Shri G.P. Garg I Executive Director, Securities and Exchange Board of India - Member - ex-officio;
• Shri Rakesh Jain - Member;
• Shri Gopal V. Kumar - Member.

Tenure

The members of the Authority appointed shall hold office for a period of 3 years and shall be eligible for reappointment.  No member shall hold office for more than three terms.  They shall be eligible for reappointment.  A member shall be eligible for reappointment after expiration of cooling off period of 3 years also his term.  The members shall hold office for a period of 3 years or till attaining the age of 65 years whichever is earlier.

Termination of office

The Central Government shall have the right to terminate the services of a member appointed, at any time before the expiry of the tenure period by giving him notice of not less than 3 months in writing for reasons mentioned as below-

• is, or at any time has been, adjudicated as insolvent;
• is of unsound mind and stands so declared by a competent court;
•  has been convicted of an offence which, in the opinion of the Central  Government, involves a moral turpitude;
• has, in the opinion of the Central Government, so abused his position as to  render his continuation in office detrimental to the public interest.

No member shall be removed under this sub-rule unless he has been given a reasonable opportunity of being heard in the matter.

A member shall also have the right to relinquish his office, at any time before the expiry of the tenure period by giving to the Central Government notice of not less than three months in writing.

Employees

The Authority shall have such number of officers and other employees for rendering secretarial assistance and for its day to day functions as are set out in Schedule 1 to these rules.

• General Manager;
• Assistant General Manager;
• Senior Accounts Officer;
• Assistant Accounts Officer.

Functions of the Authority

The Authority shall have the duty to administer the Fund for Investor Education and Protection.  The general management of the affairs of the Authority shall vest in the Chief Executive Officer, who may exercise powers, which may be authorized by the Authority.  The Chief Executive Officer shall function under superintendence and direction of the Chairperson.  The functions of the Authority include the following-

• The Authority may constitute permanent Committees for overseeing its functions.
•  Each Committee shall comprise two members - Chief' Executive Officer and concerned functional head, who shall be the secretary of the Committee. The Committee shall be headed by an ex-officio member.
• The Committee may invite experts with special knowledge and expertise. as  and when required to assist it on any specific issue.
• The Authority may outsource, if required, work related to Funds and Shares Management.
• The broad functional divisions of the Authority shall be as per Schedule II to these rules.

Divisions of Authority

The Authority has six functional Divisions as below-

• Administration;
• Investment/Funds Management;
• Claims and settlement;
• Legal and Enforcement;
• Investor Education and Protection.
• Finance, Accounts and Audit

Administration Division

The following are the functions of administration Division-

• to establish, equip, maintain and operate administrative functions as  may be necessary or deemed expedient for fulfilling the objects of the Fund;
• to form Committees and for related matters.

Investment/Fund Management Division

The following are the functions of Investment/Fund Management Division-

• to maintain funds standing to the credit of fund, invest the same in interest bearing account of any nationalized bank;
• to open depository account of authority and transfer into the account securities of investor and transferring to investors account securities upon settlement of the claim.

Claims and Settlement Division

The following are the functions of Claims and Settlement Division-

• to make refunds to eligible investors after following due procedure in respect of claims lodged by investors;.
• to distribute the  disgorged amount as per the order of the court or the Authority;
• to distribute the disgorged amount in consultation with Legal and Enforcement Division, 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. The amount to be distributed shall be limited to amount disgorged in respect of any particular order and no other funds can be used for distribution;

Legal and Enforcement

The following are the functions of Legal and Enforcement Division-

• to register associations or institutions or professional bodies or chambers of commerce and industry or other organizations engaged in investor education and protection activities;
•  to sanction grants to the registered entities for-seminars, programmes  projects or activities in the field of corporate `governance. Investors' Education and Protection including research activities;
• to monitor  the utilization of the grants to ensure the achievements of the objectives of the sanctioning of the grants;
• to cooperate  and collaborate with institutions engaged in Investor education corporate governance, awareness, and protection activities;
• to conduct on its own or in collaboration with entities engaged in Investor education and protection or academic institutions or other regulated entities like  Stock Exchanges, Depositories, Banks and Mutual funds nationwide investors'  education and awareness programmes including seminars and symposia;
• to set  up of institutional  arrangements or  infrastructure  for taking  up  programmes: projects and action plans keeping in view the objectives and  expenditure relating thereto, including research and training activities;
• to publish and disseminate information tier investors' benefit and objects and achievements of the Fund;
• to advise Central Government on the issues related to Investors' interest;
• to sponsor specific studies or research or analysis for the development of capital market.

Finance, Accounts and Audit Department

The following are the functions of Finance, Accounts and Audit Division-

• to maintain accounts of inflow and outflows of funds;
• to reconcile accounts of investors;
• to prepare all accounting reports. Audit work and annual report;
• to file Returns to Central Government;
• to prepare the  budget of authority and its monitoring;
• to account all claims of investor in respective accounts;
• to frame procedure for accounting of investors' funds and securities.

Re-allocation of functions

The Chairperson may re-allocate functions, merit or sub-divide divisions as per administrative requirement.

Meetings of the Authority

The Authority and its Committees may meet at such times and places as it may consider necessary.  There is no provision either in the Act or in the rules for the procedure to conduct the meeting and its timings.  The Authority and its Committees shall determine its own procedure fir holding of meetings.  The said meetings shall be held at New Delhi.  If it is decided to hold the meetings other than the New Delhi the approval of the Chairperson shall be obtained.  The reasons for conducting such meetings other than New Delhi have to be specified.

The Authority and the Committees shall meet at least once in a quarter and at least 4 such meetings shall be held in a financial year.  Not more than 120 days shall intervene between two consecutive meetings.

The meeting of the Authority shall be presided over by the Chairperson.  If for any reason, the Chairperson is unable to attend a meeting, any other Member chosen by the Members present from amongst themselves at the meeting shall preside over the meeting.  In case of difference in opinion on any question before the Authority, or any of its Committees, the views of the majority shall be taken as the final decision.

More than 50% appointed Members of the Authority shall constitute the quorum for the transaction of business at a meeting of the Authority. Two members of a Committee shall constitute the quorum for the transaction of business at a meeting of the Committee. 

For journeys performed by a non-official member of the Authority or Committee or a special invitee in connection with the work of the Authority or Committee, the actual expenditure for attending the meeting shall be reimbursed, subject to maximum of' such expenditure limit applicable to a Senior Administrative Grade officer of Government of India.

No act or proceeding of the Authority and its Committees shall be invalid merely by reason of-

• any vacancy in, or any defect in the constitution of the Authority and its Committees;
• any defect in the appointment of a person acting as a member of the Authority and its Committees;
• any  laches in the procedure of the Authority and its Committees not affecting the merits of the case.

Members’ right

A member. who has any pecuniary interest, direct or indirect in any matter that is brought up for consideration at a meeting of  the Authority and its Committees, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Authority and its Committees, and the member shall not take any part in any deliberation or decision of the Authority and its Committees with respect to that matter.