First time in Companies Act, 2013 and rules thereto, the concept of Director KYC was introduced in the year 2018. The Ministry of Corporate Affairs (‘MCA’) vide its Notification No. 615(E) Dated July 05, 2018 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2018 w.e.f. 10.07.2018. By this Amendment, MCA inserted a new Rule namely ‘Rule 12A’ regarding Director KYC. There wasa lot of changes in the Companies (Appointment and Qualification of Directors) Rules, 2014 in the year 2018 and 2019 which has been re-produced herein at the end of this Article. However, we would like to discuss the current position of Director KYC which is prevail as on date, which are as under: –
As per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014,
“Every individual who holds a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall, submit e-form DIR-3-KYC for the said financial year to the Central Government on or before 30th September 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 5th October, 2018.”
Provided further that where an individual who has already submitted e-form DIR-3 KYC in relation to any previous financial year, submits web-form DIR-3 KYC-WEB through the web service in relation to any subsequent financial year it shall be deemed to be compliance of the provisions of this rule for the said financial year.
Provided also that in case an individual desires to update his personal mobile or the e-mail address, as the case may be, he shall update the same by submitting e-form DIR-3 KYC only.
Provided also that fee for filing e-form DIR-3 KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, shall be payable as provided in Companies (Registration Offices and Fees) Rules, 2014.”.
Crux of the Provisions of Director KYC: –
1. Filing of e-form DIR-3-KYC for each financial year is mandatory even for person who has already filed e-form DIR-3-KYC for the previous financial year.
2. From financial year 2018-19, if any individual has already submitted e-form DIR-3-KYC for the previous financial year, then there is no need to file e-form DIR-3-KYC. In this case, he has to submit only web-form DIR-3 KYC-WEB through the web service. Web-form DIR-3 KYC-WEB through the web service is to be used by the DIN holder who has submitted e-form DIR-3-KYC in the previous financial year and no update is required in his details.
3. Moreover, in case there is a change in mobile no. or e-mail address, the DIN holder has to file e-form DIR-3-KYC after filing DIR-6 for updating of change in particulars.
4. Due date for filing e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, for Financial Year 2019-20 shall be 30th September 2020.
5. E-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, if filed within the due date of the respective financial year, NO FEE is payable. However, fee payable in delayed case is Rs. 5000/-. [Please see Companies (Registration Offices and Fees) Rules, 2014]
Please also note that there were also amendments in Rule 11 of the Companies (Appointment and Qualification of Directors) Rules 2014. By the amendment in the Rule 11, it was inserted and later on amended that after expiry of the due date by which e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, is to be filed, the MCA21 system will mark all approved DINs against which e-form DIR-3-KYC or web-form DIR-3 KYC-WEB, as the case may be, has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’ and late filling penalty/ fee shall be Rs. 5000/-.
However, the de-activated DIN shall be re-activated only after e-form DIR-3-KYC orweb-form DIR-3 KYC-WEB through the web service, as the case may be, is filed along with fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014.
Director KYC and “Companies Fresh Start Scheme, 2020 (CFSS-2020)”
Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID 19, there is delay in filing of various forms which are provided under the Act. In view of this, Ministry of Corporate Affairs (MCA) has taken special measures under Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of the COVID -19 outbreak vide General Circular No. 11/ 2020 dated 24th March, 2020.
In order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, some measures have been implemented by the MCA to reduce their compliance burden and other risks. In Para I of the said Circular-
“No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a ‘fresh start’. The Circulars specifying detailed requirements in this regard are being issued separately.”
In view of the special measure provided by MCA vide General Circular No. 11/ 2020 dated 24th March, 2020, a moratorium period from 1st April, 2010 to 30th September, 2020, has been provided by MCA, by which no additional fess shall be charged for late filing during the said moratorium period.
It is submitted that As per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014, the due date Due date for filing e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, for Financial Year 2019-20 shall be 30th September 2020. Therefore, there is no benefit of General Circular No. 11/ 2020 dated 24th March, 2020.
However, as per relaxation provided by MCA vide General Circular No. 11/ 2020 dated 24th March, 2020, be latede-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service (for the financial year ended on 31st March 2019, the individual have to submit e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, on or before 14th October, 2019),can be filed during a moratorium period from 1st April, 2010 to 30th September, 2020, without additional fees for late filing during the said moratorium period.
Further, it is mentioned in the said circular that the Circulars specifying detailed requirements in this regard are being issued separately. In furtherance of the Ministry’s Circular No. 11/2020, dated 24th March, 2020 and in order to facilitate the companies registered in India to make a fresh start on a clean slate, MCA has decided to take certain alternatives measures for the benefits of all companies.
So, MCA came out with a detailed Scheme namely, “Companies Fresh Start Scheme, 2020 (CFSS-2020)”vide Circular No. 12/2020 dated 30th March, 2020. The said CFSS-2020 automatically override moratorium period provided by General Circular No. 11/ 2020 dated 24th March, 2020.
The MCA has uploaded a list of 76 forms (including for companies and LLPs) for which the benefit of the Scheme CFSS-2020 can be availed. Director KYC is also included in the list to avail the benefits under CFSS-2020.
The said CFSS-2020 is applicable between the 1st of April, 2020 and the 30th of September, 2020.Therefore, company will be able to file remaining forms, compliances till 30th September, 2020. The said Scheme CFSS-2020 is a golden opportunity for the defaulting companies to clear their slate and to make good any filling related defaults, irrespective of the duration of defaults, without any additional fees/ penalty / prosecution and make a fresh start as a fully compliant entity.
However, under said Scheme CFSS-2020, there is one additional compliance which a company have to abide by i.e. company has to file a FORM CFSS-2020 after closure of scheme and after the document(s) are taken on file, or on record or approved by the designated authority as the case may be but not after the expiry of six months from the date of closure of the scheme. There shall not be any fee payable on this Form.
Conclusion: The de-activated DIN shall be re-activated only after e-form DIR-3-KYC orweb-form DIR-3 KYC-WEB through the web service, as the case may be, is filed along with fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014. In view of the above, it is stated that company can file e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, for the financial year ended on 31st March 2019, upto 30th September, 2020 without any additional fee, however, it has to be filed a FORM CFSS-2020 after closure of scheme.
PROVISIONS OF DIRECTORKYC SINCE 2018: –
The Ministry of Corporate Affairs (‘MCA’) vide its Notification No. 615(E) Dated July 05, 2018 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2018 w.e.f. 10.07.2018. By this Amendment MCA inserted a new Rule namely ‘Rule 12A’ regarding Director KYC.
“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 before 30th 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 eform DIR-3 KYC on or before 31st August, 2018.”
MCA also renumbered Rule 11 and inserted the new sub-rule as under-
“The rule 11 shall be renumbered as sub-rule (1) thereof and after sub-rule (1) as so renumbered, the following sub-rules shall be inserted, namely:-
(2) The Central Government or Regional Director (Northern Region), or any officer authorised by the Central Government or Regional Director (Northern Region) shall, deactivate the Director Identification Number (DIN), of an individual who does not intimate his particulars in e-form DIR-3-KYC within stipulated time in accordance with rule 12A.
(3) 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.”
It provided that every person holding DIN as on 31st March of a financial year shall be required to submit Form DIR-3 KYC. Further Directors holding DIN as on March 31, 2018 shall be required to file Form DIR-3 KYC on or before August 31, 2018. The purpose of DIR-3 KYC is to ensure that correct particulars of an individual holding DIN is available with MCA.
Further MCA vide its Notification No. 798(E) Dated 21st August, 2018 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2018 w.e.f. 21.08.2018. By this Amendment MCA amended Rule 12A regarding Director KYC as under:
“in the proviso to rule 12A, for the words and numbers “DIR-3 KYC on or before 31st August, 2018, the words and numbers “DIR-3 KYC on or before 15th September, 2018 ” shall be substituted.”
Therefore, the deadline for the filing was August 31, 2018 which was extended to September 15, 2018.
Further MCA vide its Notification No. G.S.R. 904(E) dated 20th September, 2018 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) sixth Amendment Rules, 2018 w.e.f. 20.09.2018. By this Amendment MCA amended Rule 12A regarding Director KYC as under:
“in the proviso to rule 12A, for the words and figures “before 15th September, 2018,” the words and figures “before 5th October, 2018 ” shall be substituted.”
Therefore, the deadline for the filing was August 31, 2018 which was extended to September 15, 2018 and later it was extended till October 5, 2018.
MCA vide Notification No. G.S.R. 905(E) dated 20th September, 2018 the Companies (Registration Offices and Fees) Rules, 2014 have been amended by imposing a fee of Rs. 500/- payable from 21st September, 2018 to 5th October, 2018 for filing of e-form DIR-3 KYC and fee of Rs. 5000/- payable on or after the 6th October, 2018.
Remark: in 2018, MCA introduced a new Rule (i.e. Rule 12A) to the Companies (Appointment and Qualification of Directors) Rules, 2014. According to this rule, every individual who holds DIN (Director Identification Number) has to file a new form DIR-3 KYC with MCA. This initiative aims to bring more transparency and identifying the shell companies and persons who are holding more than one DIN. MCA came up with many clarifications and amendments in the rule within a year from the date of introduction of the rule.
AMENDMENT IN RULES IN THE YEAR 2019:-
In furtherance to the above initiative, MCA has once again amended the Companies (Appointment and Qualification of Directors) Rules, 2014 providing for new mechanism of filing Form DIR-3 KYC.
MCA vide its Notification No. G.S.R. 339(E) dated 30th April, 2019 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Amendment Rules, 2019 w.e.f. 30.04.2019. By this Amendment MCA amended Rule 12A regarding Director KYC as under:
“In the Companies (Appointment and Qualification of Directors) Rules, 2014, in rule 12A, for the words and figures “on or before 30th April of immediate next financial year”, the words and figures “on or before 30th June of immediate next financial year” shall be substituted.
Further MCA vide its Notification No. G.S.R. 528(E) dated 25th July, 2019 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2019 w.e.f. 25.07.2019. By this Amendment MCA amended Rule 12A regarding Director KYC as under:
“(i) for the words “who has been allotted”, the words “who holds” shall be substituted;
(ii) for the words, letters and figures “submit e-form DIR-3-KYC to the Central Government on or before 30th June of immediate next financial year”, the words, letters and figures “submit e-form DIR-3-KYC for the said financial year to the Central Government on or before 30th September of immediate next financial year” shall be substituted.”
Further, after the proviso in Rule 12A, the following provisos was inserted, namely:
“Provided further that where an individual who has already submitted e-form DIR-3 KYC in relation to any previous financial year, submits web-form DIR-3 KYC-WEB through the web service in relation to any subsequent financial year it shall be deemed to be compliance of the provisions of this rule for the said financial year.
Provided also that in case an individual desires to update his personal mobile or the e-mail address, as the case may be, he shall update the same by submitting e-form DIR-3 KYC only.
Provided also that fee for filing e-form DIR-3 KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, shall be payable as provided in Companies (Registration Offices and Fees) Rules, 2014.”.
Further, by the said amendment Rule 11 was also amended as under:
“In the Companies (Appointment and Qualification of Directors) Rules, 2014 (hereinafter referred to as the said rules), in rule 11, in sub-rule (2) and sub-rule (3), after the letters, words and figure “e-form DIR-3-KYC” the words, letters and figures“or the web service DIR-3-KYC-WEB” as the case may be” shall be inserted.”
Further MCA vide its Notification No. G.S.R. 750(E) dated 30th September, 2019 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2019 w.e.f. 30.09.2019. By this Amendment MCA, in the Companies (Appointment and Qualification of Directors) Rules, 2014, in rule 12A, after the fourth proviso, the following Note was inserted.
“Note: For the financial year ending on 31st March, 2019, the individual shall submit e-form DIR-3 KYC or web form DIR-3 KYC-WEB, as the case may be, on or before the 14th October, 2019.”
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
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I want to do DIR- 3KYC and Form 11 and need bookkeeping assistance.