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DCA prescribes norms for financial aid from IE&PF

Richa Mishra

NEW DELHI, July 15

PROFIT-MAKING associations may not be allowed to dip into the Investor Education & Protection Fund (IE&PF). However, the Committee of the IE&PF has the power to give a project to any organisation.

The Department of Company Affairs (DCA) has prescribed this in its recent guidelines for financial assistance from the IE&PF.

The guideline stipulates that no profit making association or institution or organisation shall be eligible for registration for the purpose of financial assistance from the fund. However, the committee on IE&PF can give a project to any organisation, it states.

Early this year, the DCA had notified under sub-section (4) of Section 205C of the Companies Act, 1956, constitution of a 13-member committee to administer the IE&PF established by the Central Government with effect from October 1, 2001.

As per the guidelines, any organisation/entity/person who has a viable project proposal on investor education and protection is eligible for assistance from the fund.

The limit for each person/organisation for assistance from the fund should be subject to five per cent of the budget of IE&PF during that financial year and not exceeding 50 per cent of the amount to be spent on the proposed programme or activity, the guideline stipulates.

Further, the association or institutions or organisations already engaged in activities relating to investor awareness, education and protection and proposing to take up investors programmes, organising seminars and symposia shall undertake projects for investor protection including research activity, it states.

The guidelines stipulates that the associations or institutions or organisations shall be registered under the Societies Registration Act or formed as trusts or incorporated companies.

Further, the associations or institutions or organisations, unless specific exemptions have been made by the Committee on the IE&PF, must be in existence for a minimum period of two years prior to its date of application for registration.

The DCA guidelines also specify that the associations or institutions shall have a minimum of 20 members and a proven record of two years.

The guidelines also state that the association or institution or organisation shall be governed and managed by rules, regulations and/or by-laws. These rules, regulations and/or by-laws have to be in conformity with the conditions of registration.

It has also been specified that the association or institution or organisation shall be managed by a governing board or a management committee.

It has also been prescribed that the amount of grant assistance given from the fund shall be subject to an audit by the DCA to ensure proper utilisation, DCA officials said adding that while considering the proposals the committee will take into account the audited accounts and the annual reports of the last three years of the organisation seeking assistance from the fund.

Disclosure norms delayed: The DCA's proposal to make the disclosure of unclaimed amounts transferred to the IE&PF in their annual reports mandatory seems to have suffered minor hiccups. ``The Department is yet to firm up its view on the issue,'' official sources told Business Line.

The Department was set to notify the amendments in Schedule V and Schedule VI of the Companies Act, 1956 with the minor changes proposed by the Law Ministry. ``However, the Department decided to reconsider the Law Ministry's suggestion as it was not fully convinced with the opinion. Thus, the delay,'' the sources said.

The Department had decided to make the disclosure of the unclaimed amounts transferred to the IE&PF in the annual reports of companies mandatory by amending Schedule VI, which lays down the form in which the balance sheet and the profit and loss account should be prepared and disclosed in the annual reports of companies.

Schedule V lays down the contents and form of annual return of a company having a share capital.

The move to stipulate disclosure of the quantum of unclaimed amounts transferred to the IE&PF is set to enhance transparency in the functioning of companies, the sources said.

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