E-KYC by Directors

Ministry of Corporate Affairs has recently notified that it would be conducting KYC (Know Your Customer) verification for Directors of all companies through a new eForm DIR-3 KYC. By filing DIR-3 eKYC form the Director would have to provide a unique personal mobile number and personal email address which would both be verified with an OTP code.

This new concept of KYC by Individual holding Director Identification Holder (DIN) is introduced first time under the Indian Companies Act, 2013 which will be effective from 10th July , 2018.

The following are some of the reasons for introducing the requirement of KYC:

a) Straighten/updation of data base,

b) It was found in many case where investigation in conducted by the Government/ Registrar of Companies/ Serious Fraud Investigation /CBI/ Enforcement Directorate or any other Investigation/Law enforcement agencies, that the Directors are not traceable due to address given by them is not in existence at all or Directors has shifted,

c) DIN of deceased Directors are used/not surrendered,

d) Proper service of notices by Law enforcement agencies,

e) Sending of notices though e-mails to avoid rejection to take delivery of physical notice or notice sent physically returned undelivered and also save cost and time in servicing notice,

f) Finding Individual holding more than one DIN.

This new provisions also increase compliances. Now the certifying profession should also be more vigilant in certifying the form as any wrong details in form will attract Penal provisions under Section 448 and 449 of the Companies Act, 2013.

Provisions

Rule 12A of the Companies (Appointment and Qualification of Directors) fourth Amendment Rules, 2018 which is made effective from July 10, 2018 provide for KYC by DIN holder, which says that:

Rule 12A Directors KYC:-

Every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these Rules shall, submit e-form DIR-3-KYC to the Central Government on or before30th April of immediate next financial year.

Provided that every individual who has already been allotted a Director Identification Number (DIN) as at 31st March, 2018, shall submit e-form DIR-3 KYC on or before 31st August, 2018.

The Central Government has power regarding DIN. It has delegated the said power to Regional Director (Northern Region).

a) Filing of this form is mandatory for an Individual who has been allotted DIN on or before March 31, 2018 and whose DIN is in ‘Approved’ status.

b) Filing of this form is mandatory for an Individual who is holding valid DIN as on March 31. Hence, it is annual form to be filed by Individual holding valid DIN as on March 31 every year.

Further, even if any person holding DIN is not a Director in any Company, still he/she need to file the form annually to avoid deactivation of DIN and avoid penalty in future. Also the form is required to be filed by Disqualified Director for DIN held by him.

In view of the above, we request you to provide following details/documents of all the Directors/person holding approved DIN as on March 31, 2018:

Sr. No.	Particulars	Indian National	Foreign National
1.	Name and DIN
2.	ID Proof	PAN	Passport
3.	Permanent Address	Aadhar card/Passport/Driving License/Voter ID/Utility Bill/ Bank Statement	Passport/Driving License/ Utility Bill/Bank Statement
4.	Present Address (Not Applicable in case present and permanent address is same)	Aadhar card/Passport/Driving License/Voter ID/Utility Bill/ Bank Statement	Passport/Driving License/ Utility Bill/Bank Statement
5.	Other Documents	a) Passport, if holding* b) Aadhar Card* c) Driving License d) Voter ID	N.A.
6.	Unique Personal Mobile Number* (With country code)
7.	Unique Personal Email ID*
8.	Phone No. with STD Code
9.	Fax No. with STD Code
10.	Citizenship
11.	Nationality
12.	Digital Signature Certificate*	PAN based DSC where name in DSC should match with name mentioned in PAN	Name in DSC should be matched with his/her name entered while filing the form DIR-3 KYC

* Mandatory

1. All the documents shall be self certified.

2. If Present and Permanent address are different in that case self certified copy of any of the above documents as proof for Permanent Address is also required.

3. Passport and driving license should be valid (not expired) and Utility bills and Bank Statement/Passbook should be not older than 2 months.

4. Kindly note that in case of any documents is signed outside India – Documents should be Notarized by Foreign Notary or Apostilled from Indian Embassy in the country in which it was signed. Further in case the document is in language other than English, then it must be translated by an official translator to English and Notarized / Apostilled.

5. The Unique Personal Mobile Number and Personal Email ID would be duly verified by One Time Password (OTP).

6. In case the PAN /Name in DSC does not match with PAN/Name entered in the form, then it is required to get a DSC with PAN/Name as specified in the form.

7. In case individual does not hold any valid Passport then declaration to the effect on his/her letter head that he/she does not hold any valid Passport.

Signing and Certification

It is responsibility of a Director to file the said form annually using his/her own DSC. The said form is also required to be certified by a practicing professional (CS/CA/CMA).

Due date of filling of form and form filling fees

Sr. No.	Particulars	Due date	Filling fees
1.	Indiidual holding valid DIN as on March 31, 2018	August 31, 2018	a) Filed on or before 31st August,2018 : Nill b) Filling on or after September 1st, 2018 : Rs. 5,000/-
2.	Individual holding valid DIN as March 31 of a financial year ( after March 31, 2018)	On or before April 30,immediate next financial year (i.e by April 30, every year ) e.g: Person holding valid DIN as on March 30, 2019 need to file form DIR-3 KYC on or before April 31, 2019	a) filed on or before April 30: Nil b) Filling on or after May 1: Rs. 5,000/-

Consequences and Penal Provisions

a) In case any Director fails to file form DIR-3 KYC on or before due dates as mentioned in point no. V above, the MCA21 system, after expiry of the due date, will mark DIN of the said Directors as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’.

b) Section – 450: If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made there under, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.

c) In case any false statement / certificate in form DIR-3 KYC by DIN holder or professional certifying form, punishment under section 448 of the Companies Act, 2013.

d) In case any false evidence/documents in form DIR-3 KYC by DIN holder or Professional certifying form, Punishment under section 449 of the Companies Act, 2013.

The de-activated DIN shall be re-activated only after e-form DIR-3-KYC is filed along with fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014.

Denouenment

The introduction of KYC by DIN holder is a step towards transparency, linking and synchronizing data available with various Government Agency and helping hands for Investigation Agencies. This will increase the compliance and add one more compliance on annual basis. The strip fine and consequences of non/delay/wrong filing has far reaching consequences not only the Individual person but also the Company and Professional. It is not clear that the unique mobile no. should be an Indian number or it can be a foreign mobile number. Further, it is very difficult to find out that a particular mobile number is registered in the name of the DIN holder or obtained in the name of other person but used by DIN holder.

Date: 26/07/2018

Retraction( Disclaimer) : Please note that information contained herein is author’s personal view. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation and provisions applicable at that point of time.

Note: This is for Knowledge Sharing initiative and author does not intend to solicit any business or profession and this is just like SEWA BHAV with a very famous tagline related with Persons ‘KARMA’ tagline of this initiative is “KAR BHALA HO BHALA” .