Know your customer (alternatively, know your client or 'KYC') is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering regulations which govern these activities.
Now, Central Government has extended the KYC for Directors as well. Just like Bank KYC, where governments want to know the Director and expect them to submit a yearly intimation about KYC and any changes, if any, in the details. It's a form first time introduced by the Ministry of Corporate Affairs (MCA) wide its notification dated July 5, 2018, by issuing an amendment to Companies (Appointment and Qualification of Directors) Rules.
1. What is DIR 3 KYC Form?
DIR 3 KYC is newly introduced form by Ministry of Corporate Affairs whereby every Individual who is holding DIN is required to file his /her particulars in Form DIR-3 KYC every year on or before April 30 every year. For the current year, DIR-3 KYC is required to be filed on or before August 31, 2018.
2. What is the filing fees?
There is no filing fees for DIR-3 KYC, however, if the form is filed after the due date, there is a penalty fee of Rs. 5,000 per form. Further, Central Government or Regional Director (Northern Region) are authorized to deactivate DIN against which DIR-3 KYC is not filed.
3. What does all information Individual need to provide with eForm DIR-3 KYC?
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 Nationality, Citizenship details (whether a citizen of India or not), Gender, Date of Birth.
5) Income Tax PAN
6) Voters Identity card (optional)
7) Passport (mandatory for foreign national holding DIN)
8) Driving License (optional)
9) Aadhar card (mandatory)
10) Personal Mobile and Personal Email (mandatory)
11) Residential address. In addition to above-mentioned information, it also requires, following Documents duly attested by Practising Professional:
i) Proof of Address;
ii) Residential Proof.
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.
4. From when DIR-3 KYC is applicable and what are the important dates?
eForm DIR-3 KYC is expected to be deployed from July 10, 2018, and it is applicable to all the Individuals holding DIN. First DIR3 KYC is needed to be filed by all Individuals who have been allotted DIN on or before March 31, 2018, need to file DIR-3 KYC on or before August 31, 2018. Thereafter, DIR-3 KYC needs to be filed every year by all Individuals on or before April 30th every year.
5. Can a Disqualified Director file DIR-3 KYC?
Yes. MCA announcement made it very clear that DIR-3 KYC is mandatory for all the Directors even when the director is disqualified under the provisions of Act. Hence, any individual holding valid DIN will need to file DIR-3 KYC.
6. What are the penalties and consequences upon non-filing?
If an Individual files form after the due date, he/she will have to pay Rs. 5,000 perform as an additional filing fee. 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.
Further, a 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.