Ref : ER/Press/‘04/IEPF.26/sam-dG

Transfer Investors’ Protection Fund to SEBI: CERC

Consumer Education and Research Centre (CERC), Ahmedabad, has requested the Union Finance Minister, Mr P. Chidambaram, to transfer the Investors’ Education and Protection Fund (IEPF) from the Department of Company Affairs (DCA) to the Securities and Exchange Board of India (SEBI).

The Fund was created with the unclaimed and unpaid dividend amounts, application money and deposits with companies lying unutilised with the DCA for over seven years, CERC pointed out and added that a Joint Parliamentary Committee (JPC) recommended the creation of such a Fund to promote investors’ education and protection. The Fund was set up under Sec.205 C of the Companies Act, 1999.

A committee set up under the chairmanship of Dr N L Mitra in its report suggested that since SEBI had been constituted specially to protect the interest of the investors, the Fund should be administered by SEBI. The committee recommended that Sec.205 C of the Companies Act be repealed and similar changes be incorporated in the SEBI Act to transfer the Fund, CERC added in its letter to the Finance Minister.

Both the JPC and the Dr N L Mitra Committee lauded SEBI’s measures like establishing a risk management system, circuit breakers, dematerialisation and establishment of clearing houses, settlement guarantee funds in stock exchanges to check settlement failure, etc to protect investors.

SEBI’s step to establish investors’ protection funds in the stock exchanges, increasing the disclosure requirements, introducing disclosures of quarterly financial results of companies and strengthening the accounting standards of the companies by reporting deferred tax liability, etc. had boosted the morale of the stock market, CERC added.

SEBI also involved non-profit citizen’s groups viz., investors protection associations in the various activities to promote and protect investors’ interest. SEBI organised meetings of investors’ associations at regular intervals and gave due representation to the various investors’ associations on its various committees, namely, Primary Capital Market Advisory Committee, Secondary Capital Market Advisory Committee, Demat Committee, etc. Thus, SEBI was a more appropriate authority to manage the Fund and hence the plea, CERC said.

CERC has also requested the Members of Parliament from Gujarat to take up the issue with the Finance Minister and urge him to divert the Fund from the DCA to SEBI.

Date : 18/06/2004
Place : Ahmedabad

Pritee Shah
Editor
INSIGHT - The Consumer Magazine

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CONSUMER EDUCATION AND RESEARCH SOCIETY
“Suraksha Sankool”, Thaltej, Sarkhej-Gandhinagar Highway, Ahmedabad- 380 054 (INDIA)
Phone: 079-27489945-46 Fax: 079-27489947
E-mail: cerc@wilnetonline.net
Web Site: http://www.cercindia.org
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