# Investor Education and Protection Fund (IEPF) — Section 125

## What is IEPF?

Section 125 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 establishes the Investor Education and Protection Fund.

Established by: Central Government

Purposes:

Refund of unclaimed and unpaid amounts to investors
Promotion of investors' awareness
Protection of the interests of investors

## Amounts Credited to the Fund

The following amounts are credited to IEPF:

### Government & Donations

1. Grants by Central Government — after due appropriation by Parliament

2. Donations — by the Central Government, State Governments, companies or any other institution

### Transferred from Companies

3. Unpaid Dividend Account amounts — transferred under Section 124 (i.e., unclaimed for 7 years)

4. General Revenue Account amounts — transferred under Section 205A(5) of the old Companies Act, 1956 (pre-1999 Amendment) and still unpaid

5. Old IEPF amounts — amounts under Section 205C of the Companies Act, 1956

### Investment Returns & Recoveries

6. Income from investments — interest/other income from investments made out of the Fund

7. Disgorgement amounts — received under Section 38(4) (impersonation for securities)

> Disgorgement = legally enforced repayment of ill-gotten gains. Funds obtained through illegal/unethical transactions are paid back, often with interest and/or penalties.

### 7-Year Unclaimed Amounts from Companies

All of the following only if unclaimed/unpaid for 7 years from the date due:

Item	Description
8	Application money for allotment of securities, due for refund
9	Matured deposits with companies (other than banking companies)
10	Matured debentures with companies
11	Interest accrued on amounts in points 8–10
12	Sale proceeds of fractional shares arising from bonus shares, merger, amalgamation
13	Redemption amount of preference shares unclaimed for 7 years or more

### Other Amounts (Rule 3 of IEPF Rules, 2016)

14. Other prescribed amounts, including:

(i) All amounts payable as mentioned above
(ii) All shares under Section 124 — shares whose dividends have not been claimed/paid for 7 consecutive years or more
(iii) All resultant benefits arising out of shares held by the Authority
(iv) All grants, fees and charges received by the Authority

## The Magic Number: 7 Years

Note how 7 years is the recurring threshold for most transfers to IEPF — unpaid dividends, application money, matured deposits, matured debentures, fractional share proceeds, and redemption of preference shares.

⚠️ Common exam mistakes

Thinking IEPF exists only for refund of unclaimed amounts — it is also for investor awareness and protection.
Forgetting that shares themselves (not just unpaid dividend) are transferred to IEPF if dividend is unclaimed for 7 consecutive years.
Not remembering that the 7-year clock for matured deposits/debentures/application money runs from the date it became due, not from issue.
Confusing 'donations' (a credit source) — they can come from Govt, State Govts, companies, AND any other institution.
Believing disgorgement amounts under Section 38(4) go to the affected shareholders directly — they go to IEPF.
Missing that interest on unpaid application money, deposits, and debentures (point 11) is also credited along with the principal.

Bare-Act text Section 125, Companies Act, 2013 read with Rule 3 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 · The Companies Act, 2013 and IEPF Rules, 2016 · click to expand

Section 125(1): The Central Government shall establish a Fund to be called the Investor Education and Protection Fund. Section 125(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 account of the Central Government which had been transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956, as it stood immediately before the commencement of the Companies (Amendment) Act, 1999, and remaining unpaid or unclaimed on the commencement of this Act; (e) the amount lying in the Investor Education and Protection Fund under section 205C of the Companies Act, 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; (n) such other amounts as may be prescribed: Provided that no such amount referred to in clauses (h) to (j) shall form a 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.

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