Ministry of Corporate Affairs (MCA) vide its notification dated 5th July, 2018 has notified Companies (Appointment and Qualification of Directors) fourth Amendment Rules, 2018 (Amendment Rules). The Rule added mandatory requirement of filing of KYC (Know Your Customer – Director) i.e. DIR 3 KYC eForm for all the Individual who were holding a valid DIN as on March 31, 2018. 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.

Finally, the last of the extended deadline is over what will be the status of Individual who could not file the KYC on time?

As clarified by MCA, any Individual who are liable to file DIR 3 KYC and have not been able to file the KYC form before due date will see their respective DIN status being changed to ‘Deactivated due to non-filing of KYC’. Let us understand and evaluate the impact and analysis of the non-filing of KYC form.

Let us analyse the impact:

  • If a person fails to file Form DIR 3 KYC on or before October 5, 2018, he will be liable for Rs. 5,000 as a ROC Fees for filing of DIR 3 KYC (which was without any fees till September 15, 2018 and Filing fees was Rs. 500 after September 15, 2018 to October 5, 2018).
  • MCA will deactivate the DIN of the Individual who has failed to file the form which means that the same person will not be able to use his DIN for any purpose under Companies Act, 2013
  • Which means that a disqualified director will not be able to be appointed as a Director or resigned as a Director or even file any form for his change in designation with the registrar of Companies.
  • Disqualified Director (Designated Partner) will not be able to file any form for his appointment, resignation in LLP as well
  • Also, the Company and/or LLP will not be able to file any forms containing DIN of the Individual whose DIN is DISABLED due to non-filing of DIR 3 KYC.
  • Further, there are many provisions of the Companies Act, 2013 and LLP Act, 2008 provides for requirement of Directors to sign documents under the respective Act with DIN. Now, with deactivation of DIN, an Individual will not be able to sign any documents under Companies Act, 2013 or LLP Act, 2008 in the capacity as a Director or Designated partner.

Solution:

There is no solution for non-filing DIR 3 KYC filing and deactivation of DIN except for filing of form as early as possible. File the form with ROC fees of Rs. 5,000/- and immediately on filing of Form the DIN status will be changed to ‘Active’.

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9 Comments

  1. D Chakraborty says:

    If anybody gets a DIN number in 2012 & never given any return for that . That DIN never used in any company or LLP . The DIN is showing as deactivated due to non submission of KYC . Now can he surrender the DIN ? Is there any penalty for that ?

  2. Joson says:

    DIN is active, but the company in which I am one of the Director is not filed ROC returns for the past 3+ years. In such case, will it create any issue for me to do any other business, say a proprietory firm?

  3. VISHNU KANT MITAL says:

    In case a DIN is deactivated. Now the problem is that there is change in Date of Birth of Director, which is already rectified in PAN CARD. Now the DIR-3 KYC is not accepting particulars of PAN No. as old DOB was mention in DIN application. What to do.

  4. jigar.shah1 says:

    Correction (Thanks CS Anshul Jain for pointing out): The word ‘Disqualified Director’ is used in articles few times in the above article which is intended to be used for Individuals who have failed to file the form DIR 3 KYC on time and not ‘Disqualified’ as per Section 164 (2) and it has created some confusion.

    Further, a person who cannot file DIR-3 KYC form on time will not be treated as Disqualified Directors under Companies Act, 2013.

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