DIR-3 KYC: How to Comply?

CA Viswanathan , Last updated: 12 July 2018
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eForm DIR-3 KYC (Director's KYC) Updation How to avoid Penalty and Disqualification!!

MCA (Ministry of Corporate Affairs) has amended and inserted a new rule, Rule 12A (Directors KYC) vide the 'Companies (Appointment and Qualification of Director) rules Fourth Amendment Rules, 2018 and has notified the format of e-form DIR-3 KYC (Director's KYC)which mandates the KYC Updation in eForm DIR-3 KYC (DIRECTOR'S KYC)FOR ALL DIRECTOR'S, AND ALL PARTNERS/DESIGNED PARTNERS OF LLP failing which the directors/Partners DIN would be disqualified and would be liable for penalty of Rs. 5000/-

Do you know how many directors had faced disqualification issues (DIN disqualification)?

Well, due to the strike-off (Company dissolution action) action taken against more than 3 lakh companies and it has directly impacted more 6 lakh directors, who were directors in the Strike off companies had their DIN disqualified.

Rule 12A DIR-3 KYC (Directors KYC) is a new way in which directors can face disqualification and render your DIN as inactive, please note that this rule applies to all Directors of all companies and all partners/designated partner of all LLPs, irrespective of DIN being active or inactive and directors who's DIN is already disqualified, have to get their director DIN updation completed

What is KYC? (DIRECTOR'S KYC)

KYC refers to Know your customer (alternatively know your client or 'KYC'), the government wants to reconfirm your identity and what you update your KYC

Do you need to know what compliance you need to do and how to avoid MCA Penalty and Director disqualification

DIR-3 KYC (Director's KYC)

DIR-3 KYC(Director's KYC) to be filed every year before 30th April
Fixed penalty Rs. 5,000/- for late filing

FOR DIN ALLOTTED PRIOR TO 31st March 2018 due date is 31st Aug 2018

DIR-3 KYC(Director's KYC) form notified on 5th July 2018
DIR-3 KYC(Director's KYC) notified to come into effect from 10th July 2018
Mobile number & email id of Director only to be mentioned and it is to be certified by a professional that those belong to the Director
DIR-3 KYC(Director's KYC)Need to be done for even for disqualified directors [w.e.f.: 10th Jul]
Consequences of Non-filing DIR-3 KYC(Director's KYC) is your DIN will be 'Deactivated 'with reason as 'Non-filing of DIR-3 KYC'.
The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA)
The form should be filed by every partner/ Designed partner of all LLP's using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA)

DIR-3 KYC (DIRECTORS KYC) AN OVERVIEW

Sl. No.	Particulars	Details
1.	Form No.	DIR-3 KYC
2.	Date of deploying the new form	Tentatively July 10, 2018
3.	Frequency of filing	Annually
4.	Applicability of form	• Every director who have obtained DIN on or before 31/03/2018 (*only for this FY*) • Every individual who has been allotted DIN as on 31st March of FY • DIN status of such directors should be 'Approved' • To be filed by 'disqualified directors' also.
5.	Due date for filing form	• On or before 30th April of every year • On or before 31st August 2018 (*only for this FY*)
6.	Requirements for filing the form	• Unique personal mobile number • Personal email ID These are mandatory for generating the OTP for verification purposes.
7.	Signature requirements	• Signed using director's own DSC • Certified by practicing professional (CA/CS/CMA)
8.	Consequences of non-filing	The authorities shall deactivate the DIN of an individual who does not intimate his particulars in e-form DIR-3 KYC. The deactivated DIN shall be reactivated only after filing e-form DIR-3 KYC and on payment of Rs.5,000/-.

DIN UPDATION: DIRECTOR'S KYC UPDATION IN FORM DIN-3 KYC(Director's KYC)

Ministry of corporate affairs has issued an order to update all KYC of Directors vide its circular update in its official website www.mca.gov.in

Therefore, complying with the notification can be the deciding factor between directors of a company which is a complaint that's thriving with and one that's, well, directors being disqualified and with huge penalties for noncompliance.

But what does DIRECTOR KYC UPDATION even mean?

MCA update on director KYC update on its website www.mca.gov.in reproduced below

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

APPLICABILITY OF THE CIRCULAR TO UPDATE THE DIN KYC UPDATION (DIRECTOR'S KYC)

Who has to file DIR-3 KYC?

All the Individuals whether they are residents in India, Non Residents or Foreign nationals, who are directors/ partners any Companies/LLP are needed to file

What is the Time limit for filing DIR-3 KYC?

All Individual directors in company or partners in LLP, who have been allotted DIN till 31 March 2018 are needed to file e-form Dir-3 KYC by 31st August 2018

What if the DIN is disqualified or DIN is not active?

If you are director holding DIN which was deactivated due to disqualification arising out non-compliance and your DIN was allotted before 31st March 2018 and was deactivated due to disqualification, then it would be mandatorily required to file form DIR-3 KYC on or before 31st August 2018.

Does this form DIR 3 KYC apply to LLP?

DIN number for partners / Designated partners are allowed under Section 153 of the Companies Act 2013, hence it is applicable to partners of LLP's

If you are partner/designated partner of an LLP holding a valid DIN allotted before 31st March 2018, then would be mandatorily required to file form DIR-3 KYC on or before 31st August 2018.

PROCEDURE AND DOCUMENTS REQUIREMENTS FOR DIR-3 KYC COMPLIANCE

i. The application should be filed in DIN 3 KYC E form

ii. Directors must ensure

Unique Personal Mobile Number
Personal Email ID
This should be verified by One Time Password(OTP).
All Directors KYC Documents Such as

Copy of PAN
Aadhaar Number
Passport (If held)
Copy of Current address proof ( Bank Statement or telephone Bill)

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.

DETAILS TO BE PROVIDED BY DIRECTORS FOR DIR-3 KYC

Sl. No.	Particulars	Details
1.	DIN
2.	Director's Name First name Last name Middle name
3.	Director's Father's Name First name Last name Middle name
4.	Whether citizen of India Yes / No
5.	Nationality
6.	Whether resident in India
7.	Date of birth
8.	Gender
9.	Income Tax PAN (provide a copy of the same) In case of Indian nationals, Income-tax Permanent Account Number (PAN) is mandatory in all cases> In case the details as per Income-tax PAN are incorrect, director / designated partner is advised to first correct the details In PAN.
10.	Voters' ID card number (provide a copy of the same)
11.	Do you have a passport Yes / No
12.	Passport Number (provide a copy of the same) Mandatory in case of foreign nationals
13.	DL Number (provide a copy of the same)
14.	Aadhaar Number (provide a copy of the same)
15.	Personal mobile number
16.	Personal Email ID
17.	Permanent residential address in full
18.	Whether present and permanent residential address is the same? Yes / No If no, then provide details of both
19.	Present residential address in full
20.	Attachments: Self-attested copy of ID proof and address proof. In case of foreign nations, documents are required to be notarized and apostilled along with self-attestations.

Consequences of Non-Compliance DIR-3 KYC Forms

What happens if the forms are not filed within the due date?

Well, you DIN will be marked as Deactivate and you cannot sign any E-Forms related to the company or get appointed in any other pending disqualification

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'.

How to Get DIN Reactivation after Disqualification arising out Non Filing of DIR3 KYC

Reactivation is possible, subject to late fees payment and it and action may follow for noncompliance

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.'

CONCLUSION:

Given the strictness of the government, it is better to comply than face any disqualification or penalty

This is a very important step taken by the government due to the increase in shell companies of directors are fake and nonexistent and due to shell companies used for money laundering activities and may take action accordingly

Caution! The government may consider all the directors who do not file DIR-3 KYC the as directors of Shell companies may take action accordingly.

Given these reasons YOU SHOULD NOT MISS on filing your DIR-3 KYC forms

Source: https://virtualauditor.in/learn/dir-3-kyc-directors-kyc-updation/