Thursday, 12 July 2018

PROVIDING KYC DETAILS MADE MANDATORY FOR DIRECTORS TO STAY ON BOARD




By way of the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2014 notified on 5th July 2018, the Ministry of Corporate Affairs has made it mandatory for all the “active directors” to submit PAN-authenticated digital signatures and a certificate from Chartered Accountant or a Company Secretary to continue on the board of directors. Such certification will guarantee that the credentials of the director are verified and the legal status is known to the board member. This rule covers Indian as well as foreign directors on board of the Indian companies.

The government has undertaken this KYC exercise to make certain that only genuine individuals assume responsibility of the affairs of the company. This KYC exercise will take place by the MCA with all the 50 lakh individuals holding Director Identification Numbers (DINs) and covers all DINs issued upto 31st March 2018. For the KYC, these individuals are required to fill an electronic form by August 31, 2018 failing which their DINs will be deactivated.

The filing has to be made in e-Form DIR-3 KYC and would be mandatory even for the disqualified directors to fill the form. On expiration of due date, the MCA-21 system will be used to mark all the approved DINs against which forms DIR-3 KYC are not filed as ‘deactivated’ and provide the reason for the same as ‘non-filing of DIR-3 KYC’. However, an another opportunity for filing the form to such deactivated DINs will be given upon payment of certain fees specified under Companies (Registration Office and Fees) Rules, 2014.

Major reason for carrying out this move is to do away with the shell companies and bogus directors from the corporate sector. It was noted that many businessmen were in the practice of appointing their drivers, household helps, gardeners on the board of directors. Most often these individuals are not even aware that they are on the board of the company promoted by the employers and details come to light only when some action is initiated by the company or its owners.

The details of KYC will be made available in a short period of time as the government is working on invoking a legal provision to enjoin the two professional institutes- ICAI and ICSI to contribute in national cause to clean up the corporate sector from now on.


Salient Points on DIR-3 KYC

  1. OTP will be valid for 15 minutes
  2. Foreign citizens – the passport is mandatory, and attachment also mandatory, the permanent address should be abroad; 
  3. Aadhar mandatory for Indian citizens, 
  4. Not required to attach PAN for Indian citizens
  5. Personal Mobile no. and e-mail id should not be linked to any other director or certifying professional 
  6. Personal e-mail id should not be official e-mail id – it should be personal like gmail, yahoo etc. 
  7. Foreign citizens – mobile no. should be foreign
  8. Foreign citizens but resident in India – mobile no. can be Indian
  9. Foreign DSCs not allowed, only Indian DSCs. 
  10. Attestation of documents by practicing professional – mandatory
  11. In case of the change in address from the DIN records, first file form DIR-6 and then file form DIR-3-KYC
  12. Passport not mandatory for Indian citizens, but if you mention Yes to do you have your passport, then mandatory to give details and attach passport. 
  13. Attestation rules to be followed as specified in the Companies (Incorporation) Rules
  14. Driving licence and EC Id – not mandatory, but if you specify the details, then you have to attach the documents.



Compiled by CS Pankaj Jain - Source: ICSI webinar   


New Corporate Laws Treatise (c) all rights reserved.

Knowledge Partner: 
VEDA LEGAL, Advocates & Solicitors, New Delhi 
Contact: 011 41039024 Email: vedalegal@outlook.com 


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