No, IEPF shares are not brought with money by Govt. IEPF holds the shares as a custodian to be later distributed to correct legal investors/heirs once the proper KYC/legal/etc process is completed.
Shares are transferred to the Investor Education and Protection Fund (IEPF) in India if they remain unclaimed by the shareholder for a period of 7 years after the due date of transfer or 7 years from the date of maturity of fixed deposits.
The transfer of shares to the Investor Education and Protection Fund (IEPF) in India is governed by the provisions of the Companies Act, 2013 and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
Section 124 of the Companies Act, 2013 provides for the establishment of the IEPF and the transfer of unclaimed dividends and matured deposits to the Fund.
Rule 2(1) (h) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 defines the “unpaid matured deposit” as a deposit which remains unpaid or unclaimed for a period of 7 years from the date of maturity.
Rule 5 of the said Rules lays down the procedure for transfer of shares to the IEPF.
You may refer to the official website of the Ministry of Corporate Affairs, Government of India for more details: Home (iepf.gov.in)
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