Form DIR – 3 – KYC

With all executive overreach, Form DIR – 3 – KYC is present before us this early morning of pleasant rainy monsoon day. I welcome it with all my reservation about working of the ease of doing business with actual ease. Every individual who has a Director Identification Number (DIN); whether using, abusing, not using or disqualified from using; need to fill this form within 49 days time from today 14^th July 2018 with an exception of individuals who received their Director Identification Number (DIN) after 31st March 2018. Let us discuss more the rule and the form.

[Update: with the introduction of Form DIR-3-KYC-WEB discussed here, the law stated herein has slightly changed. Please read both posts together.]

Criticism

The form is executive overreach with no clear legislative mandate. The Companies Act, 2013 do not have any mandate to force a director to update KYC but need to have information with the registry current. For that purpose, there is a form DIR – 6. Providing wrong information to the registry is always an offence. The help file of the form simply suggests Form DIR – 3 – KYC is part of the drive of updating its registry by MCA.

Unlike the Indian Legislature, Indian executive does not legislate with a formal statement of reason and objective. Every stated reason made in the media can be achieved by asking directors to keep digital signature updated and registered with the MCA portal.

Digital Signature these days being issued only after Permanent Account Number (PAN) {Passport in case of foreign nationals], one current Address Proof, mobile number and e-mail id verification and above all a video verification with recorded voice and video message keeping front camera of your phone or laptop on.

Interestingly the abovementioned process, which might be sufficient otherwise, is still part of this DIR – 3 – KYC Process. Read on.

Appreciation

Many young professionals – company secretaries, chartered accountants, cost accountants – may have some patty assignment in bulk, with all hidden risk of course. After striking off the name of many non – working companies from registers, the government may strike off the name of dead, elderly, inactive, not – interested individuals from its registers.

I need to file my Form KYC – 3 – DIR so that the government may not call me a fake director on its Gandhi Jayanti address to the nation.

The Rules

Newly inserted Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014 mandates, “every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall submit Form DIR-3-KYC to the Central Government on or before 30th April of immediate next financial year.”

If you have DIN allotted on or before 31^st March 2019, you need to file Form DIR – 3 – KYC on or before 30th April 2019. April will be declared as Corporate KYC month.

Presently every individual, who has already been allotted a Director Identification Number (DIN) as at 31st March 2018, shall submit form DIR-3 KYC on or before 31st August 2018.

[Update 1: the date is extended to 15th September 2018]

However, only DIN with approved status shall be allowed to file the Form before 31^st August 2018.

Impact of not filing

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. Regional Director (Northern Region) is in charge of DIN Cell of MCA.

The de-activated DIN shall be re-activated only after e-form DIR-3-KYC. There will be a late filing fee of course.

The Contents

Let us discuss the contents.

Your name

The name must be as per your name registered with internal Registry of Income Tax department in relation to their Permanent Account Number (PAN). Please Note, In the PAN display name may be different from the registered or official name. Word of caution is any professional certifying your name will look the PAN display name not the registered name. To continue as Director, your registered name and display name should be the same, practically. A person without PAN (foreign national) need not worry about and may rely on name displayed on their passport.

Nationality should be as displayed on the passport. Please note, India has no concept of dual passport or citizenship; any person having a passport of the foreign nation is foreigner whether he surrender or not his Indian passport. Please refer to my earlier post here.

Nir – Aadhaar

If you are a foreign national that passport is mandatory. In the case of an Indian citizen, PAN and UID/Aadhaar are mandatory. Yes, one can challenge the form making UID/ Aadhaar mandatory. Not sure, this seems part of the drive of UID companies to force more people to take Aadhaar before possible invalidation by honourable Supreme Court. This might be a mockery of Indian judiciary by Indian executives.

[Update 1: With effect from 9th August 2018, UID/Aadhar is not mandatory for directors who are Indian citizen but resident outside India.]

[Update 2: with effect from 13th August 2018, UID/Aadhar is not mandatory for directors who either have a passport, Voter identity card or a driving licence.]

[UPdate 3: with effect from 15th August 2018 form was again updated]

[Update 4: with effect from 23rd August 2018, UID/Aadhar is mandatory for directors, if they already have UID/Aadhar otherwise  a passport, Voter identity card or a driving licence is sufficient]

Personal Mobile number and personal e-mail id will be verified by the form based on one – time password (OTP). There will be two OTPs – one for mobile and another for e-mail. The button will be enabled only after successful Pre-scrutiny of the form.

Remember, only two attempt of generation of OPTs in any 30 minutes and only 10 attempts in 24 hours. Otherwise good, this may cause serious issues keeping in mind volume of the workload on the system till the last date.

Permanent residential address

There comes my loss of understanding. When you ask your current address proof, it should be proof of your present residential address. However, the form treats it proof of your permanent residential address. As I discussed earlier here, there is a lot of confusion with the executives about the concept of permanent residential address and present residential address. To avoid confusion, one can always opt for saying the present residential address is the same as a permanent residential address. None know the definition. Yes, you can opt for different addresses if you have two different addresses proof with different addresses. Is it possible actually as both address proof not present or permanent address proof?

Note: In common social understanding, your ancestral/parental home in hometown is your permanent residential address until you cut your roots by selling the ancestral house.

Signature

PAN-based Class -2 digital signature certificate duly registered with MCA registered with all (not updated) details available with MCA registry shall be used to sign the form. The applicant shall sign the form digitally.

Certification

The Form shall be digitally signed by a Chartered Accountant, Cost Accountant or

Company Secretary, who is in whole-time practice. This will be a certification of the correctness of the contents. Cheers! The form is already PAN, Mobile, email confirmed, just verify Aadhaar number and check address proof.

Discount on Filing Fee

Like a discount sale, no fee till 31st March 2018 for the person with DIN showing approved status on MCA portal. The fee will be whose DIN status is ‘deactivated’ and the reason for deactivation is ‘Non – filing of KYC in DIR-3 KYC’.

I am presently not sure about the fee for approved status individuals filing the form in the month of April 2019.

Approval

Online immediate approval, relax and have a drink.