In India, the Ministry of Corporate Affairs (MCA) regulates corporate affairs through the Companies Act, 1956. In connection with that, the MCA notified that they would be conducting KYC verification annually for all Directors of all companies via a new format of eform i.e. DIR 3 eKYC. So basically DIR 3 eKYC (being a new format of e form) would be the database of individual Directors with their real and personal details in it (like mobile number, e mail id and residential address) so that they could be easily traceable for future investigations. This introduction of DIR 3 eKYC would be the step towards giving helping hands to Legal and Investigating Agencies by compiling and synchronizing data in case of faulty evasions. This means that KYC would be mandatory for all DIN holders.
(As we all know, DIN is a Director Identification Number. It is a unique eight digit number and allotted to directors for the lifetime validity. Means a person who wants to be a director in one or more companies must acquire DIN.)
The MCA had stipulated that all the Directors who had been allotted DIN (Director Identification Number) on or before 31st March 2018 would have to file form i.e. eKYC on or before 15th September 2018 for the Financial Year 2018-19. And for the Financial Year 2019-20, all the Directors who had been allotted DIN on or before the end of this Financial Year would be required to file their form eKYC on or before 30th April of the immediately succeeding financial year. This eKYC (Know Your Customer) form is mandatory for all Directors whether they are qualified or disqualified or holding directorship in any company or not or their status of DIN is in Approved mode.
As per recent announcement of MCA, all Directors are required to enter their personal mobile number with personal mail i.d. in this form (DIR-3 KYC). Then the same will automatically gets verified by an OTP process. So, here it is necessary that the mobile number and email id provided must be unique and have not already linked with some other person’s database of DIN holder. Otherwise, the system will show an error in case the form already been filed. As the system does not allows anyone to do multiple filing of form DIR 3 eKYC. Then all the provided information here in the form eKYC will gets updated in the database of DIN holder.
After getting done with own (Director’s) Digital Signature while filing this e-form. It is also mandatory that this form should be duly certified by practicing professionals like Chartered Accountant (CA)/ Company Secretary (CS) and Cost and Management Accountant (MCA).
And after the expiry of above mentioned dates, the Department would have right to mark all non-compliant DIN as “Deactivated due to non-filing of DIR-3 eKYC” against which DIR eKYC form has not been filed yet. However, then for the reactivation of the same, a certain amount of fees is required to be paid with filing of form DIR-3 eKYC. Once the form gets filed then the system will automatically re-activate the DIN.
DOCUMENTS REQUIRED FOR FILING DIR-3 Ekyc
The following documents are necessary while filing DIR-3 eKYC with duly attested by Practicing Professionals:-
- Identity proof like PAN, Aaadhar card, passport etc. And In case of foreign national is holding a DIN, passport is mandatory.
- Address Proof
- The documents (given for identity poof) must have individual’s full name with photograph, his date of birth and his father’s full name.
- Unique Personal mobile number
- Personal Email id.
- Digital Signature of applicant filing the form
- Attested documents by Practicing Professionals like Chartered Accountant or Company Secretary or Cost Accountants.
- In case of Foreign Nationals, Documents are required to be attested by the prescribed authority.
- A declaration is also mandatory to be provided by the applicant duly attested by practicing professionals.
WHY IS DIR 3 eKYC REQUIRED
DIR 3 eKYC is required due to several reasons as mentioned below:-
- As per MCA (Ministry of Corporate Affairs) it is mandatory for all directors to submit their personal information related with their names, personal contact numbers, e mail ids and permanent addresses via new eform called DIR 3 eKYC. So, that this provided information by the applicant will automatically gets updated in the database as required by the ROC and the Government.
- DIR 3 eKYC is not only important for individuals, companies and professionals but equally important for Investigation Agencies also. As being the step towards transparency, this links the available data with several Government Agencies and Investigation Agencies.
- Sometimes, in case of fraud occurs by the applicant, it becomes difficult to trace the fraudsters due to wrong permanent addresses or they shifts, wrong contact numbers and unavailability of other needful details. So this idea of getting real and permanent details of applicants could be useful to trace them even in case of evasions.
- This is also required in the situation where the DIN of deceased Director are used or even not surrendered yet. So, that the ROC would come to know about the Director holding DIN is no more in existence.
- Filing of DIR 3 eKYC is necessary for the proper services of notices by Law enforcement agencies.
- It is also a good idea to file DIR 3 eKYC, to detect the individual who is holding more than one DIN.
- Sometimes, Legal notices send may get undelivered due to the addresses not in existence. So, in that case also updated database would help to deliver the same within the one time attempt.
- Also, sometimes the legal mails got failure or rejected due to wrong email addresses. Well in that case also DIR 3 eKYC is mandatory to avoid extra time that generally gets wasted due to unnecessary reasons.
- At last but not the least, the most important reason for filing DIR eKYC is to avoid fees and fines. As per MCA the late filing of DIR 3 eKYC will attract the fees of Rs 5000. And in case of any wrong or misleading information as provided by the individual will be liable to pay penalty under Section 448 and Section 449 of the Companies Act, 2013. Also, the non filing of DIR 3 eKYC will lead to deactivation of DIN.