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Director KYC (Know Your Customer) is a crucial process mandated by regulatory authorities to verify and authenticate the identity of individuals serving as directors in a company. It is a fundamental requirement aimed at ensuring transparency, preventing financial crimes, and promoting corporate governance within organizations.
Purpose of Director KYC:
The primary purpose of Director KYC is to mitigate the risk of identity fraud, money laundering, and terrorist financing within the corporate sector.
Director Identification Number (DIN) is a unique eight-digit number assigned by Central Government of India, to a person who intends to become director or is already a director in a company. The concept evolved when corporate landscape felt the need to have a system of identifying and tracking the directors. The DIN serves as a unique identification number that remains with the director throughout his/her career and keeps track of their experience as director, name and number of companies they are associated with etc.
With a view to update its registry, MCA announced that from financial year 2019-20 onwards it is mandatory for every director having DIN, on or before the end of any financial year and whose DIN is in approved status, to do the KYC by filing form DIR-3 KYC on or before 30th September of the immediately next financial year. For example: In respect of Financial Year 2023-24, any directors who have been allotted on or before 31st March 2024 and whose DIN is in approved status as on 31st March 2024, will have to do the Director KYC by 30th September 2024 by filing e-form DIR-3 KYC. If Director KYC is not done by the due date, system will mark all non-compliant DINs (against which DIR-3 KYC form has not been filed) as ‘Deactivated due to non-filing of DIR-3 KYC’.
Following are two types of DIR-3 KYC e-form:
1. DIR-3 KYC – First is DIR-3 KYC, to be filled by any director who is filing e-Form DIR-3 KYC for the first time after allotment of DIN or whose details are required to be updated/changed.
2. DIR-3 KYC (Web) – This form is filed by any director who has already filed the e-Form DIR-3 KYC/DIR-3 KYC (Web) in the previous year when there is no change in his/her KYC details. In this e-Form, the basic details of the director are pre-filled from the MCA data and, those cannot be changed.
There is no fee for filing form DIR-3 KYC within the due date of the respective financial year.
However, if on missed the filing and is trying to file after the due date when DIN status is turned ‘Deactivated due to non-filing of DIR-3 KYC’ a Fee of INR 5,000 becomes payable.
Login to MCA website by clicking “Sign In/Sign Up” button on the homepage. If you are not already registered on the MCA website, you can first register by clicking the ‘Register’ button, entering the required details. Once you have your User ID and password, you can sign in using the User ID and password.
After logging into the MCA website, go to MCA Services -> Company e-Filing -> DIN Related Filings -> click Form DIR-3 KYC or Form DIR-3 KYC Web.
On the form, the Director must enter the DIN number, mobile number and email ID. OTP will be sent to mobile number and email ID. Enter the OTP and click on ‘Next’.
The Director will be asked to provide following information in the DIR-3 KYC form
• Name: The Director must provide his/her first name and last name, as appearing on PAN card. Acronyms, short forms are not allowed in the name.
• Father's name: The Director must provide his/her father’s first name and last name, as appearing on PAN card. Acronyms, short forms are not allowed in the name.
• Nationality: Director must declare his nationality. A Director who is foreign national must declare nationality as per his/her Passport.
• Date of birth: Director must declare his/her date of birth in DD/MM/YYYY. It is important to carefully mention the correct date as anyone below the age of 18 years is ineligible to file the application.
• Gender: The Director need to mention the gender here
• PAN number: The Director need to mention the Permanent Account Number here
• Mobile number: The Director need to mention the mobile Number here
• OTP sent to mobile number: OTP needs to be mentioned for verification of mobile number
• Email ID: The Director need to mention the Email ID here
• OTP sent to email ID: Email OTP needs to be mentioned for verification of Email ID
• Aadhaar number: The Director need to mention the Aadhaar number here
• Permanent residential address: Director’s permanent residential address must be mentioned here and proof of permanent address must be attached
• Present residential address: When current residential address is different from Permanent residential address the current residential address must be provided here.
If the Director is filing e-form DIR-3 KYC (Web), the above details comes-in prefilled in the form and the details which doesn’t show up as pre-filled needs to be provided by the Director.
PAN number is mandatorily to be verified by clicking “Verify income-tax PAN” button. The system will verify the details using the PAN card details.
The documents required to file form DIR 3 KYC are as follows:
• Permanent address proof, such as Voter's ID, driving license or PAN card
• Present address proof, such as utility bills not older than 2 months, rental agreement, etc.
• Aadhaar card
• Passport (mandatory in case DIN holder is a foreign national)
• Other optional documents
Please note that all documents should be self-attested.
After completing all the required fields and uploading the required documents, the e-form must be validated i.e. it must be digitally signed by a Chartered Accountant/Cost Accountant/Company Secretary licensed to practice.
After carefully reading the information filled, click the ‘Submit’ button
After the e-Form DIR-3 KYC is successfully submitted, an SRN is generated and assigned to the applicant for future MCA correspondence.
The applicant will receive an email acknowledging receipt of the form on his email ID. Once the approval email is received, filing eForm DIR-3 KYC is complete.
• Every director's personal mobile number and email ID will have to be provided while filing the e-Form. These will be verified by an OTP (one-time password).
• The director has to use his/her own digital signature certificate (DSC) while filing the e-Form.
• The director has to ensure that complete and correct information is provided in the e-Form and it should be duly certified by a practising Chartered Accountant (CA) or Company Secretary (CS), or Cost Accountant.
Importance of Director KYC for DOCS:
For DOCS, which specializes in all types of business registration services, adhering to Director KYC requirements is imperative.
Conclusion:
Director KYC is an essential component of corporate governance and regulatory compliance for companies like DOCS offering business registration services.
Enhanced Security: Director KYC mitigates risks by verifying the identities of company directors, ensuring regulatory compliance and fraud prevention.
Improved Due Diligence: Helps companies maintain transparency, build trust with stakeholders, and prevent financial crimes by verifying director identities.
Regulatory Compliance: Director KYC ensures adherence to legal requirements, protecting businesses from penalties and reputational damage associated with non-compliance.
Risk Mitigation: Screening directors aids in identifying potential conflicts of interest, ensuring corporate governance, and safeguarding against fraudulent activities.
Investor Confidence: Complete and accurate director information instills trust in investors, fostering better relationships and potentially attracting more investment opportunities.
Every Individual having DIN, on or before the end of any financial year and whose DIN is in approved status, is required to do KYC by filing form DIR-3 KYC.
The last date for filing DIR-3 KYC is 30th September of the immediate next financial year. i.e. due date for filing of DIR-3 form for FY2023-24 is 30th September 2024.
No, there is no for filing DIR-3 KYC form if it is filed within due date. However, if the form is filed after the due date, then there is a late fee of INR 5,000 payable.
The DIN holder and a professional (CA/CS/CMA) certifying the form are the two signatories in form DIR-3 KYC.
: Yes, any person who has been allotted a DIN and the status of such DIN is Approved, is required to file form DIR-3 KYC. Hence, disqualified director is also required to file form DIR-3 KYC.
: Send OTP button gets enabled only after successful pre-scrutiny of the form. Hence if you will see prior to successful pre-scrutiny, you will find it disabled. After successful pre-scrutiny, the form must be saved and only after saving the form, the ‘Send OTP’ button gets enabled.
: No, a person cannot file DIR-3 KYC more than once in a financial year.
: As per the Companies Act, Email ID and Mobile number of the DIN holder can be updated only by filing Form DIR 3 KYC form. This form can be filed only once in a financial year. Therefore, DIN holders can update their Email ID and Mobile number, when they will be allowed to file Form DIR-3 KYC for the next financial year.
: No, it is not mandatory for DIN holder to create login ID complete file their DIR 3 KYC. Professionals can file DIR-3KYC for DIN holders from his MCA V3 portal ID.
: Yes, he is required to file DIR 3 KYC. Holding of directorship is not a criterion for filing of DIR-3 KYC. Every DIN holder has to file DIR-3 KYC with MCA.
: Following are mandatory attachments for filing DIR 3 KYC Form:
• Copy of PAN Card,
• If any Permanent Resident Address – Copy of Aadhar Card
• If present Resident Address (If same as Permanent address): Copy of Aadhar Card
• If present Resident Address (If different from Permanent): Utility Bill (Mobile Bill, Electricity Bill, any other document in proof of same)
• Copy of Passport (in case DIN holder is foreign national)
: Yes, all documents to be attached for foreign national are required to be apostilled and notarized.