Section 125 — Investor Education and Protection Fund

(1) The Central Government shall establish a Fund
to be called the Investor Education and Protection Fund (herein referred to as the Fund).
(2) There shall be credited to the Fund—
(a) the amount given by the Central Government by way of grants after due appropriation made by
Parliament by law in this behalf for being utilised for the purposes of the Fund;
(b) donations given to the Fund by the Central Government, State Governments, companies or any
other institution for the purposes of the Fund;
(c) the amount in the Unpaid Dividend Account of companies transferred to the Fund under
sub-section (5) of section 124;
(d) the amount in the general revenue acc ount of the Central Government which had been
transferred to that account under sub -section ( 5) of section 205A of the Companies Act, 1956
(1 of 1956), as it stood immediately before the commencement of the Companies (Amendment) Act,
1999 (21 of 1999), and remaining unpaid or unclaimed on the commencement of this Act;

1. Subs. by Act 21 of 2015, s. 11, for “unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be”
(w.e.f. 29-5-2015).
2. 2. The Explanation ins. by s. 11, ibid. (w.e.f. 29-5-2015).
3. Subs. by vide Notification No. S.O. 1303(E), for sub-section (7) (w.e.f. 24-3-2021).

(e) the amount lying in the Investor Education and Protection Fund under section 205C of the
Companies Act, 1956 (1 of 1956);
(f) the interest or other income received out of investments made from the Fund;
(g) the amount received under sub-section (4) of section 38;
(h) the application money received by companies for allotment of any securities and due for refund;
(i) matured deposits with companies other than banking companies;
(j) matured debentures with companies;
(k) interest accrued on the amounts referred to in clauses (h) to (j);
(l) sale proceeds of fractional shares arising out of issuance of bonus shares, merger and
amalgamation for seven or more years;

(m) redemption amount of preference shares remaining unpaid or unclaimed for seven or more
years; and
(n) such other amount as may be prescribed:
Provided that no such amount referred to in clauses ( h) to (j) shall form part of the Fund unless such
amount has remained unclaimed and unpaid for a period of seven years from the date it became due for
payment.
(3) The Fund shall be utilised for—
(a) the refund in respect of unclaimed dividends, matured deposits, matured debentures, the
application money due for refund and interest thereon;
(b) promotion of investors’ education, awareness and protection;
(c) distribution of any disgorged amount among eligible and identifiable applicants for shares or
debentures, shareholders, debenture -holders or depositors who have suff ered losses due to wrong
actions by any person, in accordance with the orders made by the Court which had ordered
disgorgement;
(d) reimbursement of legal expenses incurred in pursuing class action suits under sections 37 and
245 by members, debenture-holders or depositors as may be sanctioned by the Tribunal; and
(e) any other purpose incidental thereto,
in accordance with such rules as may be prescribed:
Provided that the person whose amounts referred to in clauses ( a) to (d) of sub-section (2) of section
205C transferred to Investor Education and Protection Fund, after the expiry of the period of seven years
as per provisions of the Companies Act, 1956 (1 of 1956), shall be entitled to get refund out of the Fund in
respect of such claims in accordance with rules made under this section.
Explanation.—The disgorged amount refers to the amount received through disgorgement or disposal
of securities.
(4) Any person claiming to be entitled to the amount referred in sub -section ( 2) may apply to the
authority constituted under sub-section (5) for the payment of the money claimed.
(5) The Central Government shall constitute, by notification, an authority for administration of the Fund
consisting of a chairperson and such other members, not exceeding seven and a chief executive officer, as
the Central Government may appoint.
(6) 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 such rules as may b e
prescribed.
(7) The Central Government may provide to the authority such offices, officers, employees and other
resources in accordance with such rules as may be prescribed.

(8) The authority shall administer the Fund and maintain separate accounts and o ther relevant records
in relation to the Fund in such form as may be prescribed after consultation with the Comptroller and
Auditor-General of India.
(9) It shall be competent for the authority constituted under sub-section (5) to spend money out of the
Fund for carrying out the objects specified in sub-section (3).
(10) The accounts of the Fund shall be audited by the Comptroller and Auditor-General of India at such
intervals as may be specified by him and such audited accounts together with the audit report thereon shall
be forwarded annually by the authority to the Central Government.
(11) The authority shall prepare in such form and at such time for each financial year as may be
prescribed its annual report giving a full account of its activities during the financial year and forward a
copy thereof to the Central Government and the Central Government shall cause the annual report and the
audit report given by the Comptroller and Auditor -General of India to be laid before each House of