Lok Sabha Question No. 4709 (UNSTARRED), answered on 2020-03-23
Subject: Illegal Money Pooling Schemes
Ministry: CORPORATE AFFAIRS
Asked by: Shashi Tharoor

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 4709 ANSWERED ON MONDAY THE 23 rd  MARCH, 2020 CHAITRA 3, 1942 (SAKA)

## ILLEGAL MONEY POOLING SCHEMES QUESTION

4709. Dr. SHASHI THAROOR:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) Whether the Ministry has introduced measures to provide safety to investors from illegal money pooling schemes and to clamp down on illicit fund raising activities:
- (b) If so, the details thereof and if not, the reasons therefor;
- (c) The details of amendments made to the Companies( Incorporation) Rules, 2014 and Investor Education and Protection Fund (IEPF) Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 for transparency in approving the names for companies and protection of the interests of investors;
- (d) Whether the Ministry is about to integrate Artificial Intelligence into operations of its e-governance service MCA-21; and
- (e) If so, the details thereof and if not, the reasons therefor?

## ANSWER

## THE MINISTER OF STATE FOR FINANCE AND CORPORATE AFFAIRS                                           (SHRI ANURAG SINGH THAKUR)

वित्त एिं कारपोरेट कार्य मंत्रालर् में राज्र् मंत्री                                                                             (श्री अनुराग स ंह ठाक ु र)

(a)& (b): Investor Education and Protection Fund (IEPF Authority) has been set up under Section 125 of the Companies Act, 2013 with the objective of promoting investor education, awareness, protection and to make refund of claim to the investors. The IEPF  Authority  organizes  Investor  Awareness  Programmes  (IAPs)  through  the Professional  Institutes  and  CSC  e-Governance  Services  India  Limited,  with  the objective of creating awareness amongst the Investors as a part of its mandate. Apart from this, awareness creating messages are disseminated from time to time through print and electronic media. Details of IAPs conducted during the last 3 years is as under:-

| Financial Year   |   By Professional Institutes |   By CSC e-Governance |   Total |
|------------------|------------------------------|-----------------------|---------|
| 2016-17          |                         1096 |                  1075 |    2171 |
| 2017-18          |                          357 |                  5519 |    5876 |
| 2018-19          |                          796 |                 26843 |   27639 |
| 2019 - 20        |                          101 |                 11624 |   11725 |
| Total            |                         2350 |                 45061 |   47411 |

Besides, the IEPF Authority has also entered into Memorandum of Understanding with various organisations like India Post Payment Bank, Nehru Yuva Kendra Sangathan and various Banks with the objective of creating awareness among the investors. Section 125(3)(c) of the Companies Act 2013 provides for distribution of  any  disgorged  amount  among  eligible  and  identifiable  applicants  for  shares  or debentures, shareholders, debenture-holders  or depositors who have suffered  losses due to wrong actions by any person, in accordance with  the orders made by the Court which  had    ordered  disgorgement.  Further  section  125  (3)(d)  also  provides  for 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 National Company Law Tribunal.

(c): Companies (Incorporation) Rules, 2014 have been amended vide GSR No. 357(E) dated 10.05.2019 to bring more clarity to the rules related to name availability by inclusion of illustrations in the rules, providing a clear test to determine as to whether the applied name resembles too nearly with the name of an existing company and bringing more clarity in the rule related to general names / descriptive names and trademark applicability with the help of many illustrations that have been given to explain  the  different  scenarios.  Investor  Education  and  Protection  Fund  Authority (Accounting, Audit, Transfer and Refund) Rules 2016 have been amended vide GSR No. 571(E) dated 14.08.2019 to simplify the process of refund of claims filed with the IEPF Authority.    The  amended  rules  provide  for  authentication  of  identity  of  claimant through online verification of PAN, e-verification of claim by the Nodal Officer of the Company and online processing of claim by the IEPF Authority.

(d)& (e): Currently Version 2 of the MCA 21 system is operational. MCA 21 Version 3 envisages various areas such as Helpdesk Solutions, e-Consultation Module, Security and  Threat  Management  for  utilizing  the  capabilities  of  Artificial  Intelligence  and Machine Learning.

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