Don’t invest PF money in your own firm, EPFO tells exempted establishments
1 min read . Updated: 14 Jun 2017, 12:45 PM IST
PremiumEPFO has spotted several EPF exempted organizations investing provident fund (PF) accumulations in their own companies or subsidiaries
New Delhi: The Employees’ Provident Fund Organization (EPFO) has spotted a new problem—several organizations managing their Employees’ Provident Fund are investing PF accumulations in their own companies or subsidiaries.
“In the various reviews of EPF exempted establishments, it has been found that many establishments invest accumulated PF fund amount in their own entity or in their subsidiary entities," EPFO said in a circular to its regional offices and top PF commissioners across India, asking them to stop these establishments from doing so.
It, however, did not mention the name of the establishments, which are doing so.
As a “checkpoint", the EPFO has asked these exempted establishments to not invest PF accumulations in their own company or their subsidiaries. There are around 3,000 exempted establishments or companies who manage their employees’ PF money directly, though they work under the overarching rules of the retirement fund manager.
It said such companies shall not invest in any of the “securities/bonds issued by the exempted establishment..."
It shall also not invest in any of the “securities/bonds issued by the establishment, with which the employer of the exempted establishment is related or occurring any key position like director, independent director etc."
Besides, such companies shall not invest in any of the securities/bonds issued by the establishment, which is fully or partially owned subsidiary of the exempted establishment.
However, it said that the board of trustees of the exempted establishments will not make investment “beyond 5% of the fresh accretions in a financial year, in the securities of an establishment in which the exempted establishment holds over 10% of the securities issued, and the total volume of such investments will not exceed 5% of the total portfolio of the fund at any time".
A regional PF commissioner, who declined to be named, said that the EPFO head office needs to clarify the last point as it overlaps with one of the points mentioned earlier where it talks about the partially owned subsidiary of an exempted establishment.
