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’.

Disclaimer:

This material and the information contained herein are prepared by JMJA & Associates LLP, Practising Company Secretaries (JMJA) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of JMJA, its associate firms, or its members/employees is, by means of this material, rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. JMJA shall not be responsible for any loss whatsoever sustained by any person who relies on this material.

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3 responses to “DIR 3 KYC – What if it is not filed on time?”

  1. 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.

  2. alagiri says:

    what is the procedure if director died , so we cant file dir -3 kyc

    • jigar.shah1 says:

      Once there is a death of Director you cannot and should not file DIR-3 KYC. Instead file DIR 5 of Director for surrender of DIN.

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