Discover the far-reaching consequences of not filing DIR 3 KYC for directors and companies. From deactivation of DIN to operational limitations, this article emphasizes the critical importance of timely compliance. Understand the impacts on both individual directors and the overall company, shedding light on the multifaceted repercussions. Stay informed to ensure active status and seamless business operations.
Introduction: Filing DIR 3 KYC is not just a regulatory requirement but a crucial step for directors and companies to maintain their active status. This article outlines the repercussions of not submitting DIR 3 KYC, shedding light on the impact it has on both directors and companies. Understanding these consequences underscores the importance of timely compliance with this vital obligation.
The rule for DIR 3 KYC was notified with effect from July 10th, 2018. The MCA has notified the Companies (Appointment and Qualification of Directors) fourth Amendment Rules, 2018
Every director who has been allotted a DIN on or before March 31st of a financial year must submit e-form DIR-3KYC to the Central Government.
If a person fails to file DIR-3 KYC by the due date, the MCA21 system will mark their DIN as ‘Deactivated,’ citing the reason as ‘Non-filing of DIR-3 KYC.’
After the due date, filing of DIR-3 KYC in respect of such deactivated DINs will be allowed upon payment of a specified fee of Rs. 5,000, without prejudice to any other actions that may be taken.
However, the main question for discussion is: what are the consequences/effects/impacts on a company if any director fails to file their DIR-3 KYC?
Impact on Director:
If a person fails to file DIR-3 KYC, their DIN will be ‘Deactivated’ in the records of the MCA. The following are the impacts on directors:
i. They can’t be appointed as a director in any new company or LLP.
ii. They can’t resign from any company or LLP.
iii. They can’t mention their DIN on any document related to the company.
Impact on Company:
i. The company will not be able to file any annual forms, such as AOC-4 and MGT-7, with the ROC.
ii. The company will not be able to file any other forms with the DSC of a director whose DIN has been deactivated.
iii. The company will not be able to have any documents signed by such a director or mention their DIN number.
CONCLUSION:
Filing DIR 3 KYC goes beyond the submission of a form; it safeguards the active status of both directors and companies. The article highlights the necessity of timely compliance, as filing within the due date incurs no additional fees. However, delay in filing triggers not only monetary penalties but also operational limitations. Professionals are advised to prioritize DIR 3 KYC filing for all clients promptly, ensuring uninterrupted business operations and compliance with legal obligations.
*****
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
Author Bio
what is the consequences of wrong attachment in DIR-3 KYC form
Dear Sir, The impact on Director and Company has not been mentioned anywhere in companies laws.