Know more about DIR-3 KYC (including Engagement Letter) By CS Annu Sharma


Dear Professionals,

Know your customer (alternatively, know your client or 'KYC') is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering regulations which govern these activities.

Now, Central Government has extended the KYC for Directors as well. Just like Bank KYC, where governments want to know the Director and expect them to submit a yearly intimation about KYC and any changes, if any, in the details. It's a form first time introduced by the Ministry of Corporate Affairs (MCA) wide its notification dated July 5, 2018, by issuing an amendment to Companies (Appointment and Qualification of Directors) Rules.

MCA has notified Companies (Appointment and Qualification of Directors) fourth Amendment Rules, 2018, MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYC. Accordingly, every Director who has been allotted DIN on or before 31st March 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file form DIR-3 KYC on or before 31st August 2018 for the current financial year. Extended till Sept 15, 2018

While filing the form, the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password (OTP). The form should be filed by every Director using his own DSC and should be duly certified by a practising professional (CA/CS/CMA).

The interesting thing about the form is that Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.

After expiry of the due date by which the KYC form is to be filed, the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’ and late filing penalty shall be Rs. 5000/-.

After the due date filing of DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a specified fee only, without prejudice to any other action that may be taken.
 
Now we will elaborate on the New Form and get some core points about the same through FAQs.

Applicability of DIR-3 KYC

Every Director who has been allotted DIN on or before 31st March 2018 and whose DIN is in ‘Approved’ status, Either Indian or Foreigner.

Due –Date to file the Form

For the Financial year 2018-19 before 31st August 2018.

Extended till Sept 15, 2018

For the Financial year 2019-20 onwards - before 30th April of the immediately next financial year.

What if not Filed by the directors?

After expiry of the respective due dates, the system will mark all non-compliant DINs against which DIR-3 KYC form has not been filed as ‘Deactivated’.

What if Late Filed after Due Date?

The penalty shall be Rs. 5000/-

What are the Documents for Indian Directors?

PAN Card

Aadhar Card

Passport (If Available then Mandatory).

What are the Documents for Foreign Directors?

Passport

Other Available ID & Address Proof

Whether attestation of documents required or not?

Documents should be self-attested & attested from a Professional too.

Details required to be filled in the E-form?

DIN- Director Identification Number

Permanent Account Number (PAN)

Aadhar No.

Passport No. (If Available)

Unique Mobile Number

Unique E-mail Address.

Email ID or Mobile Should be Official of the director?

No, It Should be Personal, not Official.

What is OTP (One-time password) Functionality in the E-form?

It is mandatory to enter your personal mobile number and personal email ID in the form DIR-3 KYC and the same has to be verified by an OTP process. Further, the mobile number and email ID must be unique such that it is not already linked with some other person in the DIN holders’ database

How does OTP work?

Send OTP button will be enabled only after successful Pre-scrutiny of the form. After successful Pre-scrutiny, the user has to click on ‘Send OTP’ button.

What is the validity of the OTP?

OTP Shall be valid for 15 Minutes only.

How will the E-form be signed?

The DIN holder and a professional (CA/CS/CMA) certifying the form are the two signatories in form DIR-3 KYC.

How Can Disqualified Directors update their KYC?

Any person who has been allotted DIN and where the status of such DIN is ‘Approved’, is required to file form DIR-3 KYC. Hence, disqualified directors can also file form DIR-3 KYC in the same manner.

What is the Fee to file the Form?

There is no fee to update KYC of directors.

Whether more that one DIR 3 KYC can be filed for single director?

The system will not allow multiple filing of form DIR-3 KYC for an applicant. In case KYC is already filed for a DIN, and such DIN is entered again, the system throws an error that the form is already filed.

If directors are a non-resident then how OTP will be verified.

In case DIN holder is non-resident, foreign address and foreign number shall only be allowed.

If Permanent & Present Address of the director is not same?

Proof of address attached to form DIR-3 KYC for both permanent as well as present address shall be in line with the documents specified as Residential Proof in Rule 16(1) of the Companies (Incorporation) Rules, 2014.

Whether OTP can be verified before pre-scrutiny or check for?

No, One Time Password (OTP) can only be verified after Pre-scrutiny or Check Form.

Can a Director provide Voter ID & Driving license?

Voter ID & Driving license is not mandatory but yes if you fill the details in the form then the director has to attach the copy of the same.

In case of Change in Address of Director?

In case of Change in an address from DIN records, Firstly update the address by filing E-form DIR-6.

 
As a good corporate practice please find below draft format for authority /engagement letter w.r.t. DIN KYC.

ENGAGEMENT LETTER/ AUTHORITY LETTER

Date:
To,
(Name of Professional)
(Address)
(Designation)
 
Ref.: (DIN: ________________________________)
 
Sub: Engagement for certification of e-form DIR-3 KYC and my representations for verification of information mentioned in the form and Authority to use Digital Signature.
 
Dear Sir,
 
This representation letter is provided in connection with your certification/verification of e-form DIR-3 KYC under provisions of Companies Act, 2013. With reference to the various provision of Companies Act, 2013 read with relevant rules, I hereby engage you for certification e-form DIR-3 KYC and verification of details mentioned therein.

Further, I hereby authorize you for the purpose of using My DSC for the above-mentioned purpose.
 
Further I am enclosing herewith my below information and documents required by your good self to verify details mentioned in e-form DIR-3 KYC:
 
  1. a) Self attested copy of my Pan Card, AADHAR Card, Passport
  2. b) Unique Personal mobile number:
  3. c) Personal E-mail Id:
 
Signature:
 
Name       : _______________________________
DIN           : ____________________________________
Address:   ____________________________________________________________________
Encl. As above

 

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