eFORM DIR-3 KYC

eFORM DIR-3 KYC

A recently new form notified by Ministry of Corporate Affairs (MCA), which states that,

“As part of updating its registry, MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYC to be notified and deployed shortly”.

Accordingly, every Director who has been allotted DIN on or before 31^st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file form DIR-3 KYC on or before 31^st August, 2018. While filing the form, the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password (OTP). The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA). Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.

After expiry of the due date by which the KYC form is to be filed, the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’. After the due date filing of DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a specified fee only, without prejudice to any other action that may be taken.

eForm DIR – 3 KYC, is introduced for directly disqualified the Director, by inactive his/her DIN. This is directly relating to the 30-35 lakh “active directors” on company boards will have to submit PAN-authenticated digital signatures and a certificate from a Chartered Accountant or a Company Secretary or a Cost Accountant to remain on boards as part of a massive KYC exercise undertaken by the government to ensure that only genuine individuals are responsible for running the affairs of companies. The ministry of corporate affairs has ordered that it will be conducting the KYC exercise with all the 50 lakh individuals holding DINs, or director identification numbers, being asked to fill up an electronic form by August 31. Those who do not submit the form will see their DINs deactivated. The exercise covers all DINs issued up to March 31, 2018.

While the original plan was to go for an Aadhaar-linked authentication, the move had to be shelved in the wake of the ongoing case in the Supreme Court. PAN-authenticated digital signatures will also serve the purpose, explained government officials. PAN in the digital signature will be matched with the income tax department’s database to ensure that bogus directors are weeded out. Besides, most of the PANs are linked to Aadhaar, providing further comfort.

Companies (Appointment and Qualification of Directors) Rules, 2014

In the Companies (Appointment and Qualification of Directors) Rules, 2014,

(i) 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.

(ii) after rule12, the following shall be inserted, namely:-

"12A Directors KYC:- Every individual who has been allotted a Director Identification Number (DIN) as on 31 st March of a financial year as per these rules shall, submit e-form DIR-3-KYC to the Central Government on or before 30^th 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 31^st August, 2018."

Rule 12A of Companies (Appointment and Qualification of Directors) Rules, 2014, is introduced for Director either to comply with Rules or face Disqualification directly by rendering his/her DIN as Inactive. Once it is Deactivated, then they are not able to file any eFORM in Future.

 

What is DIR - 3 KYC eForm ?

 

DIR-3 eKYC form is newly introduced form, whereby every Individual who is holding DIN is required to file his /her details in eForm DIR-3 KYC every year on or before April 30 every year. However, For the current year, DIR-3 KYC is required to be filed on or before August 31, 2018.

However, such CKYC Form (Central KYC Registry) is already applicable to Bank, Depository Participant, Stock Broker, Mutual Fund etc., whenever Client open account with intermediaries, it is used for the purpose of Anti Money Laundering since long. The form is unique among all respective authority like SEBI, RBI, IRDA etc.

But, as after finding many loop holes in current scenario, the same scheme is extended to Director also by Ministry of corporate Affairs, which might not be part of above authority.

To Whom the eForm DIR – 3 KYC is Applicable ?

 

ALL DIRECTORS, (Whether Qualified or Disqualified)

DIR-3 eKYC form would be applicable to all Directors, who have been allotted a DIN on or before 31st March 2018. The date for allotment of DIN can be ascertained from the date of DIN allotment letter.

The DIN eKYC form must be filed using the Directors own DSC (Digital Signature) and should be certified by a practicing Professional like Chartered Accountant, Company Secretary or Cost Accountant.

Any Companies, who have continuously not filed company annual return for 3 years have recently been disqualified by the MCA. However, MCA has already provided an opportunity for reactivating such companies through the Condonation of Delay scheme. Many Companies has obtained such facility also. 

Even though, there are many companies whose, Directors been disqualified by the MCA are required to file DIN eKYC to update their email and phone number on MCA record. Failure to file DIR-3 eKYC form by disqualified Directors will also lead to additional penalty.

FOR EXAMPLE 

à     If, DIN was allotted to Mr. A on or before 31^st March, 2018, then he would require to file DIR-3 KYC on or 31^st August, 2018.

à    If, DIN was allotted to Mr. A on or after 1^st April 2018, then he would need to file DIR-3 KYC before 30^th April 2019.

Who has to File eFORM DIR – 3 KYC ?

 

All the Individuals

Whether they are residents in Indian national, Non Residents or Foreign nationals, who are directors/ partners any Companies/LLP anywhere are needed to file.

Is eFORM DIR – 3 KYC also applicable to Partners/Designated Partners  ?

 

Any Individual, who are partner/designated partner of an LLP holding a valid DIN (Director Identification Number) allotted on or before 31st March 2018, then it would be mandatorily required to file form DIR-3 KYC on or before 31st August 2018.

 

If any Director had been allotted multiple DIN, Is there any need to File eFORM DIR – 3 KYC, for each DIN ?

 

YES,

Though, holding Multiple DIN, is always not good, however if by any reason, without knowing the same, if any Director holding multiple DIN on or before 31^st March, 2018, it is advisable to surrender the one of such DIN as soon as possible, during the course Director also need to File eFORM DIR – 3 KYC, for all the DIN, which holds on or before 31^st March, 2018.

If any Director holding multiple Directorship in Company, is there any need to file the eFORM DIR – 3 KYC, for each Company ?

 

NO,

eFORM DIR – 3 KYC, need to file based on DIRECTOR IDENTIFICATION NUMBER (DIN), so even though, if any Director holding multiple Directorship in Company, then also they need to File eFORM DIR – 3 KYC, only once according to their DIN.

Why DIR – 3 KYC Form ?

 

TO CHECK THE MENACE OF SHELL COMPANIES

The practice started by MCA in February 2017, for effectively tackling the malpractices by shell companies/ponzy companies/khoka companies in a comprehensive manner adopting whole of the government approach.

To consolidated relevant information at one place and based upon inputs from all law enforcement agencies, the Serious Fraud Investigation Office under the Ministry of Corporate Affairs has undertaken the exercise of preparing comprehensive digital database of shell companies and their associates that were identified by various law enforcement agencies. This database, as on date, comprises of 3 lists, viz

1.    CONFIRMED LIST

The Confirmed List has a total of 16,537 confirmed shell companies on the basis of the information received from the various Law Enforcement Agencies of the companies found to be involved in illegal activities.

2.   DERIVED LIST

The Derived List has 16,739 companies identified on the basis of 100% common directorships with the confirmed shell companies.

3.   SUSPECT LIST

The Suspect List has 80,670 suspected shell companies and has been drawn up by SFIO using certain Red Flag Indicators. The Task Force has identified certain Red Flag Indicators, which will be used to identify more shell companies.

Is there any Due Date for Filing of DIR-3 eKYC ?

 

YES,

Due Date is always come with each and every Form (whether existing or new), by virtue of that, Ministry of Corporate Affairs has fixed 31st August 2018 as the due date for filing DIR-3 eKYC Form. However, previous record also shows that, if necessary arise extension may be granted by Ministry, but it is always advised to complete the process on or before due date. 

However, if DIN eKYC is not completed on or before the due date as mentioned above, the MCA system will automatically deactivate those DINs for which the form is not filed. In such cases, the system will show the message that DIN was deactivated for ‘Non-filing of DIR-3 KYC’.

Once, DIN is deactivated for non-filing of DIN eKYC form, it can be reactivated by paying a penalty and by filing DIR-3 eKYC form.

 

Is there any Fees for Filing of DIR-3 eKYC ?

 

As of now, NO SUCH FILING FEES IS PRESCRIBED by MCA. But it is matter of Fact, in next year, we may need to pay the Fees.

Is there any Penalty Fees for late Filing of DIR-3 eKYC ?

 

Yes, of course, if no penalty levied, then compliance level not upto the mark, and ultimate vision of such form may not be achieved, so if any delay in Filing of DIR – 3 eKYC or DIN eKYC, the Penalty Fees of Rs. 5,000 per Form should be levied. The Central Government or Regional Director (Northern Region) are hereby authorized to deactivate DIN against which DIR-3 KYC is not filed within due date, deactivated DIN means a person cannot act as a Director while his DIN is deactivated and any act done by him/her will be invalid and which might attract various penalties under Companies Act, 2013. In addition to the above penalty, any wrong information, if any provided in the form, will also liable for penalty under Section 448 and 449 of the Companies Act, 2013. 

Which information necessary for filing of Form ?

 

As no such form is notified by MCA, but Pursuant to [Rule 12A of The (Companies Appointment and Qualification of Directors) Rules, 2014], the details need to be provided such as

While we still await actual eForm, the draft form attached with Rules requires the following information:

1) Director Identification Number (DIN)

2) Full Name of Individual

3) Fathers Name of Individual

4) Other basic details like

·         Citizenship details (whether a citizen of India or not),

·         Nationality,

·         Date of Birth,

·         Gender.

5) Income Tax PAN, (Which is Verify with Income Tax Website)

6) Voters Identity Card Number (optional)

7) Passport (mandatory for foreign national holding DIN)

8) Driving License (optional)

9) Aadhar card Number (mandatory)

10) Personal Mobile and Personal Email (mandatory)

11) Permanent Residential address,

12) If present residential address is different from Permanent Residential address then provide present Residential Address.

13) Mobile No. and Email id shall be of the Director himself only.

14) In case of Indian nationals, Passport if not Mandatory, In case of foreign

nationals Passport is Mandatory.

In addition to above, it also requires, following Documents duly attested by Practising Professional:

Ø  Proof of Identity like PAN / Passport / Aaadhar card

Ø  The proof of identity document should have persons’ full name, his father’s full name along with photograph of the applicant and his date of birth.

Ø  Proof of Address.

Ø  Optional attachments, if any.

In case of Foreign Director -

Ø  Copy of Passport and residential proof

Ø  (any 1 out of Bank Statement/ Electricity bill/ Telephone bill/ Mobile bill, but not older than 1 year).

Other Information/Documents required:

1. Digital Signature of Individual filing the form (applicant).

2. Attestation of documents by Practising Professionals.

3. In case of Foreign Nationals, documents need to be attested by authority prescribed.

4. A declaration cum mandate by the applicant, to be provided by practicing professional, to enable professional to certify the form.

v  Mandatory Information DIR-3 KYC eFORM –

·         Unique Personal Mobile Number

·         Personal Email ID.

·         OTP on Email ID and Mobile No.

v  Certification of DIR-3 KYC eFORM- 

·         DSC of Director

·         DSC of practicing professional (CA/CS/CMA)

Is there any attachments Required ?

 

PAN CARD

For all Indian Nationals, PAN card is to be filed compulsorily.

PASSPORT

For all foreign nationals who are having DIN, their passport number is to be mentioned in the form compulsorily. Passport is not compulsory for Indian residents but they have to provide their details of their passport if they have the same.

AAADHAR CARD

Aaadhar is mandatory for filing this form. Aaadhar details should match the PAN and DIN details. Present residential address shall be the same as per the address proof documents attached along with this form. 

PASSPORT SIZE PHOTO

As it is not mandatory, but in optional Attachment it is advisable to attached the same and also keep record the same for Compliance Purpose.

Who are eligible to File Such Form ?

 

As per notification on MCA, DIR – 3 eKYC duly certified by a practicing professional like, Chartered Accountant, Company Secretary or Cost Accountant.

Is it mandatory for a person to have DSC to file DIR-3 KYC ?

 

YES,

It is mandatory to affix DSC of Director on his e-form DIR-3 KYC. So this is the First Step to obtain DSC of Directors.

What happen if Director Effect of director fails to file DIR-3 KYC?

If, by any reason, Director is fail to file the DIR – 3 KYC eForm within Due Date then, MCA21 system will MARK ALL APPROVED DINS AS ‘DEACTIVATED’ with reasons as ‘Non-filing of DIR-3 KYC’, which may cause problem in future.

Yes, once DIN (Director Identification Number) is allotted, it is, IMMATERIAL WHETHER DIRECTOR IS HOLDING A DIRECTORSHIP OR NOT, MUST HAVE TO FILE DIR – 3 KYC FORM EVERY YEAR.

e-form DIR-3 KYC clearly specify that, PERSONAL MOBILE NUMBER AND PERSONAL EMAIL ID IS MANDATORY FOR FILING. Therefore, Director have to use their own personal Mobile Number and Email ID.

By this practice what MCA want to Prove ?

 

TO CLEAN UP THE REGISTRY WILL CREATE A TRANSPARENT AND COMPLIANT CORPORATE ECOSYSTEM PROMOTE THE CAUSE OF ‘EASE OF DOING BUSINESS’ AND ENHANCE THE TRUST OF THE PUBLIC.

In a drive carried out under the supervision of the Ministry of Corporate Affairs in the Financial Year 2017-18 the Registrars of Companies (ROCs) identified and removed from the register of companies under Section 248 of the Companies Act, 2013 the names of 2,26,166 companies, which had not filed their Financial Statements or Annual Returns for a continuous period of two or more financial years. As many as 3,09,619 directors were also disqualified u/s.164(2)(a) read with Section 167(1) of the Companies Act, 2013 for non-filing of Financial Statements or Annual Returns for a continuous period of immediately preceding 3 financial years (2013-14, 2014-15 & 2015-16).

For the 2nd drive to be launched during the current Financial Year 2018-19 a total of 2,25,910 companies have been further identified for being struck-off under section 248 of the Companies Act, 2013 along with 7191 LLPs for action under section 75 of the LLP Act, 2008 due to non-filing of financial statements for the years 2015-16 and 2016-17. An opportunity of being heard will be given to these identified companies and LLPs by way of notices regarding their default and the proposed action. Appropriate action will be taken after considering their response.

By using DIR – 3 eKYC what MCA Gain ?

The mechanism for sharing of documents and information amongst all the Law Enforcement Agencies has been put in place. Standard Operating Procedure regarding ‘SHARING OF DOCUMENTS’ has been finalised and CIRCULATED AMONGST ALL THE LAW ENFORCEMENT AGENCIES for compliance. The Task Force is the appellate authority for this purpose. The Standard Operating Procedure for sharing of information amongst the various Law Enforcement Agencies has also been finalized and circulated by Central Economic Intelligence Bureau, which is the Nodal Agency for this purpose.

The Government expects that its EFFORTS TO CLEAN UP THE REGISTRY WILL CREATE A TRANSPARENT AND COMPLIANT CORPORATE ECOSYSTEM in India, promote the cause of ‘ease of doing business’ and enhance the trust of the public. The existence of black money creates imbalances in the economy, finances terror and crimes like money laundering etc., puts the honest at a disadvantage, deprives the State of the much needed revenues and ultimately adversely affects the poor of the country. 

ADVICE FOR PROFESSIONAL

Before certifying the forms by professional have to collect information’s and documents.

CERTIFICATION

I declare that I have been duly engaged for the purpose of certification/verification of this form. It is hereby certified that:

Ä      ·         I have satisfied myself about the identity of the applicant and his address based in the   perusal of the original of the attached document,

  

    Note: In case where the applicant is residing outside India the particular have to be verified from the documents duly attested by the attesting authority as prescribed

Ä      All required attachments have been completely attached to this application.

Ä      I have gone through the provision of The Companies Act, 2013 and rules thereunder for the subject matter of this form and matters incidental thereto and I have verified the above particulars (Including attachment (s)) from the original records maintained by the Company/applicant which is subject matter to this form and found them to be true, correct and complete and no information material to this form has been suppressed.

      ·             I further certify that:

o   Mobile no. and Email ID belong to the applicant/director signing the form.

o   All the required attachments have been completely and legibly attached to this form.

o   I have kept the copy of this form and attachments thereto, in my records for the further reference.

o   It is understood that I shall be liable for the action under section 448 of The Companies Act, 2013 for wrong certification, if found at my stage.

NOTE:

As per certification column of form (mentioned above also) - following are the important points for concerned:

à  Mobile no. and Email ID belong to the applicant/director signing the form.

à  I have verified the above particulars (Including attachment (s)) from the original records maintained by the applicant

à  I have satisfied myself about the identity of the applicant and his address

à  *** I declare that I have been duly engaged for the purpose of certification/verification of this form

     

ADVICE FOR PROFESSIONAL TO OBTAIN DECLARATION FROM DIRECTOR

Professionals must take a Declaration Form the Individual, whose eForm DIR – 3 KYC Filed.

DECLARATION

From,

(Name of Individual)

Address:

City :

State :

                                                                                                                     Date: _________

To

(Name of Professional)

(Firm Name)

Practicing Company Secretary, Charted Accountant, Cost Accountant,

COP No.

Address:

City :

State :

Subject:          Declaration for certification e-forms DIR-3 KYC

Ref:                DIN –

Directorship in Company : Name of Company in Which, appointed as Director

Company Name :

1.          ABC Pvt. Ltd.

2.          ABCD Pvt. Ltd.

(Must verify with MCA Website with his/her DIN)

Dear Sir/Mam,

I hereby Declare that, the information is provided in connection with your certification/verification of e-form DIR-3 KYC under provisions of Companies Act, 2013, and as per Rule 12 of Companies (Appointment and Qualification of Directors) Rules, 2014.

I hereby, declare that, for certification of e-form DIR-3 KYC and verification of details mentioned in the form are true.

Further, kindly consider the below information/document required by your good self to verify details mentioned in e-form DIR-3 KYC:

1.  Self-Attested Copy of PAN Card

2.  Self-Attested Copy of Passport

3.  Self-Attested Copy of Aadhar Card

4.  Passport size Photo 

5.  Mobile Number (Which is belong to me Only)

6.  Email ID (Which is belong to me Only)

However, I hereby also declare that, in future if any information shown to be false, I am personally liable for that, and respectively oblige to. Not your Firm or any partner will be liable for any false information as provided by me.

___________________

(Name of Individual)

DIN:

SUGGESTION FOR PROFESSIONAL

 

Ø  Professional has to give declaration that he/she are engaged for Certification/verification of this form only i.e. eForm DIR – 3 KYC.

Following should be course of action for the professional if he certified the e-form DIR-3 KYC.

à Collect Declaration Form from every Individual and mentioned all the details as per Declaration.

à Must ensure that, the Mobile No. and Email ID belongs to Director only.

à Must Preserve copy of all attachments and form in his record, which may be helpful for future reference, if any show-cause notice issued by Ministry against such form.

Thanks & Regards,

CS Meetesh Shiroya

          

Disclaimer:

The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. I assume no responsibility therefore. In no event, I shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.