Section 205 Investments and Securities Act

Section 205 of the Investments and Securities Act 2025 is about Payment out of the investor protection fund. It is under Part XIV (Investor Protection Fund) of the Act. It provides as follows:

(1) The board of trustees may apply the funds of an investor protection fund for payment of —
(a) claims by investors arising from the insolvency, bankruptcy or negligence of a failed dealing member firm as may be ascertained, determined or directed under the provisions of this Act;

(b) claims, including costs, of an investor allowed by the exchange, arising from defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing member firm in the course of its business as a capital market operator;

(c) any amount ordered to be paid as compensation to an investor by the Commission or the Tribunal in respect of any claim or loss arising from defalcation as provided for in section 214 of this Act;
(d) claims arising from losses incurred by revocation or cancellation of the registration of a dealing member firm under the provisions of section 61 (6) of this Act;

(e) all legal, professional and other expenses incurred in investigating or defending claims made under this Part of the Act or incurred in relation to an investor protection fund or in the exercise by the board of trustees of the rights, powers and authority vested in it by this Part of the Act in relation to an investor protection fund;

(f) all premiums payable in respect of contracts of insurance or indemnity entered into by the board of trustees;
(g) the expenses incurred or involved in the administration of the investor protection fund including the salaries and wages of persons employed by the board of trustees in relation to it; and

(h) all other money payable out of an investor protection fund in accordance with the provisions of this Act.

(2) Payment of any claim, award, or order for compensation under subsection (1) (a)-(d), shall be made subject to such limitations on the amount that may be claimed as determined by the board of trustees and approved by the Commission.