DIR-3 for KYC of Directors

eKYC of Directors in DIR-3

The Government of India, Ministry of Corporate Affairs have decided to carry out annual KYC verification through DIR-3 for KYC of all directors of all companies at the end of each financial year with a view to update the Registry and to keep a check on shell companies. Thus, in exercise of powers available under the provisions of the Companies Act, 2013, the Ministry of Corporate Affairs have notified the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2018 on July 5, 2018 which have come into effect from July 10, 2018. The said notification is reproduced herein under;

What is KYC?

KYC means “Know Your Customer” or “Know Your Client” which ensures the identity and address of an individual who is subject to KYC verification. Here it is carried out through DIR-3 for KYC.

DIR-3 for KYC of Directors

The said notification has amended Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014 to introduce sub-rule (2), (3) and inserted Rule 12A which mandate each individual, who is a director as at the end of each financial year, i.e. March 31 to e-file DIR-3 to the Central Government on or before April 30 of the next financial year. For example, individuals who are directors as on 31/03/2019 shall submit DIR-3 for KYC on or before 30/04/2019 and likewise each year. Those individuals who are directors as on 31/03/2018 shall have to e-file DIR-3 on or before 31/08/2018.

Consequences of Failure to file DIR-3

Disqualification as a Director

Those who fail to e-file DIR-3 for KYC documents shall be disqualified as a director of the Company and his DIN (Director Identification Number) shall be deactivated until DIR-3 is e-filed in the prescribed manner. It is pertinent to note here that this can lead to a serious issue when a company has only two directors and one of such director fails to comply as it can lead to temporary closure of the Company till DIR-3 is not e-filed. The filing of DIR-3 is mandatory for all directors including those who are disqualified.

Late Fees for delayed filing

Those who fail to e-file DIR-3 for KYC within the stipulated deadline shall pay late filing fees of ₹5,000 as per the provisions of Rule 12A of the Companies (Registration Offices and Fees) Rules, 2014 duly amended on 05/07/2018.

How to e-file DIR-3 for KYC of Directors?

An individual who is a director shall have to submit the following documents / information to e-file DIR-3 for KYC;

1. Self attested PAN (Permanent Account Number) Card

2. Self attested Aadhaar Card

3. Self attested permanent address proof (utility bill, bank statement, telephone bill or property tax bill)

4. Self attested Passport, if available

5. PAN linked DSC (Digital Signature Certificate).

6. Personal Email ID

7. Unique Personal Mobile number where an OTP will be sent which needs to be verified within 24 hours

8. DIN and PAN details must match. If they do not match, PAN details will have to be modified

9. Certification by a Company Secretary or a Chartered Accountant