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New compliance for directors – DIR-3 KYC

The Central Government of India decided to conduct KYC drive to bring down the shell companies. Ministry would be conducting KYC of all the directors of the companies as a part of updating its registry.

MCA (Ministry of Corporate Affairs) has amended and inserted a new rule, Rule 12A (Directors KYC) vide the Companies (Appointment and Qualification of Director) Rules, Fourth Amendment Rules, 2018 . The rule came into effect on July 10, 2018.

In a registered company or new company registration, every director who has been allotted Director Identification Number (DIN) on or before 31st March, 2018 and whose DIN is in ‘Approved’ status would be mandatorily required to file form DIR-3 KYC by August 31, 2018.

Directors of the company will be going through this KYC procedure annually.

Need for this amendment

  • Government is administering a drive to maximize corporate governance in order to get rid of shell companies, unprincipled and dishonest directors who are running benami companies (where actual owners and directors are not on the records or books). This KYC exercise is undertaken to sift that only genuine individuals are responsible for running the affairs of any company.
  • MCA would be conducting KYC of all the directors of the company as a part of updating its registry.

Who all are covered under this compliance?

  • All the individuals whether residents in India, non-residents or foreign nationals, who are directors / partners any companies / LLP are required to file KYC form.
  • The KYC details are to be mandatorily submitted by director of the company and by disqualified directors as well.

Directors are required to fill the DIR-3 KYC E- Form available on the MCA’s website.

Information Required 

  • It is mandatory for the Indian directors that all the data furnished in the DIR-3 KYC form is in accordance with the information registered with the Income Tax Department (in PAN)
  • The full name of applicant, as mentioned in attached documents, should be provided without using any abbreviations.
  • Using of prefix, Late is not required for a deceased person. The married women are also required to fill in their father’s name only.
  • It is obligatory for a foreign national with a DIN, to possess a passport. The passport number shall be duly filled in the form. For Indian nationals, having a passport isn’t compulsory, but in case the person has a passport then its details must be mentioned in the form.
  • Details of AADHAR should be in compliance with the details furnished in both PAN and DIN.
  • The applicant must provide personal working mobile number and e-mail id. An OTP shall be sent for the verification of both the contact details.
  • Present residential address should be the one mentioned in the documents attached for the address proof. The permanent address may or may not be the same.

Documents to attach with Form

  • Identity proof (PAN / Passport/ AADHAR Card): The document should declare applicant’s and his father’s name along with the photograph of the applicant and his date of birth.
  • Proof of present address: Passport/ AADHAR Card/ Voter Identity.

Signatures

  • The form has to be digitally signed by the applicant using digital signature.

Certification of DIR-3 KYC form

  • The form has to be certified subsequent to its verification, with the original documents, by a practicing CA/CS/CMA professional.

Fee for filing DIR -3 KYC form

  • No fees to fill form DIR-3 KYC provided the form is being filled within the specified time-frame.
  • The applicant will be filed with a fee of INR 5000 in case of delayed submission.

Consequences for not filing e-form DIR-3 KYC

  • After expiry of the due date by which the KYC form is to be filed, in case of non-compliance, the DIN shall be marked deactivated along with the reason “Non-filing of DIR-3 KYC” .However, the de-activated DIN shall be re-activated only after filing of E-form DIR-3 KYC.
  • Also late fee penalty of INR 5000 shall be levied on filing after the expiry of due date.

Make sure you file DIR-3 KYC before 31st August 2018. If you need any assistance to comply with this new rule reach out our experts.