By Simran Jalan (firstname.lastname@example.org)
Pursuant to the Rule 12A and 11(2) and (3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, every individual who are holding DIN/DPIN shall submit an e-form DIR 3 KYC to the Central Government on or before 31st August, 2018 for the purpose of updating the personal identification details of the director concerned.
Accordingly, the MCA is conducting KYC for all DIN/DPIN holders. The same has to be updated on or before 31st August, 2018 and thereafter annually.
Listed below are some of the important points to be considered before filing DIR 3 KYC.
For filing the form:
- Nationality and citizenship are two different things. A person can choose “India” as its nationality but if he is holding two citizenships then he may/may not check yes in the field ‘Citizen of India’.
- ‘Send OTP’ button will get enabled once the form is pre-scrutinized i.e., after affixing DSC.
- The OTP is valid for 15 mins
- In permanent address field, if the applicant is the resident of India then he has to write his Indian address but if he is resident outside India then he will have to write his foreign address.
- Personal Mobile number and personal id may include the id of the company but it should be used only by the applicant.
- DSC must be associated with the same PAN, as mentioned in the form for citizens of India and for foreign citizens the name on the DSC and the applicant’s name should match.
- Signatories under DIR 3 KYC: Applicant (DIN/DPIN holder) and Professional.
- For non-resident directors, their foreign address and foreign numbers shall be inserted in the ‘permanent address field’.
- The DIN/DPIN holder is responsible for filing the form. He will have to fill in the OTP, not the professionals.
- In case of foreign nations, their documents are required to be attested by the authority prescribed i.e., apostilled/notarized documents.
- Aadhaar is mandatory for a citizen of India.
- Copy of PAN is not compulsory to provide.
- Proof of Address will be as per Rule 16 of the Companies (Incorporation) Rules, 2014 which states:
“(n) Residential proof such as Bank Statement, Electricity Bill, Telephone / Mobile Bill:
Provided that Bank statement Electricity bill, Telephone or Mobile bill shall not be more than two months old; “
Thus, an applicant is not required to attach his Aadhaar card twice.
- Attachment of Aadhaar and passport is mandatory if selected yes in the required fields.
- If you have a Driving License/Voter ID card then it is recommended to provide the same in the Form.
- The name in the DIN and PAN must be the same.
- Disqualified directors are also required to file DIR 3 KYC but filing of the same will not remove their disqualification.
- If DIR 3 KYC is filed within due date, then no fee is applicable. If it is filed after due date then fine of Rs. 5000 is applicable.
- Penalty/Fine for not filing is on individual directors.
- A person cannot file DIR 3 KYC more than once.
- For every subsequent F.Y. 30th April is the due date for updating their DIR 3 KYC.
- If there is any discrepancy in any of the information, then first DIR 6 is required to be filed for updating the information and then the Form DIR 3 KYC should be filed.
Consequence of not filing DIR 3 KYC:
If any DIN/DPIN holder fails to file DIR 3 KYC within the stipulated time i.e. 31st August, 2018, then the DIN of such director or DPIN of such designated partner will be de-activated. The re-activation of such de-activated DIN/DPIN can be done only after filing DIR 3 KYC along with a fee of Rs. 5000. So, all the DIN/DPIN holders should take steps to file this e-form at the earliest.
By Simran Jalan (email@example.com)
MCA vide its notification dated July 31, 2018 has brought the Companies (Accounts) Amendment Rules, 2018 which broadly deals with two changes:
- Additional disclosures for companies other than small companies and OPCs;
- Abridged list of contents for small companies and OPCs
Even though the aforesaid amendment in the said Rules have been brought in line with the proposed changes in section 134 of the Companies Act, 2013 (‘CA, 2013’) under the Companies (Amendment) Act, 2017, however, the said amended section has not been enforced till date.
Additional disclosures for companies other than small companies and OPCs:
The additional disclosures required to be made are with respect to:
- Maintenance of cost records in accordance with section 148(1) of the CA, 2013 in case the same is applicable on such company.
- A statement on constitution of Internal Complaints Committee under the Sexual Harassment of the Women at workplace (Prevention, prohibition and Redressal) act, 2013.
Relief for small companies and OPCs:
The Rules state that small companies and OPCs are not required to make the disclosures stated under Rule 8. Instead, as per Rule 8A of the aforesaid Rules, an abridged list of disclosures have been given for small companies and OPCs, which are as follows:
- The web address of the company, where the annual return has been placed;
- Number of meetings of the Boards;
- Director’s Responsibility Statement;
- Details of frauds s reported by auditors to Central Government as per section 143(12) of the CA, 2013;
- Explanations or comments by Board on every observation made by the auditor in his report;
- The state of the Company’s affairs;
- The financial summary or highlights;
- The material changes in the nature of business and its effect on the financial position of the Company;
- The details of appointment/resignation of directors;
- Details of material orders passed by regulators/courts/tribunals which can impact the going concern status of the company and its operations in future;
- The Board’s Report shall also include the particulars of the contract or arrangements entered with related parties as per section 188(1) of the CA, 2013 in the Form AOC-2.
Following the aforesaid change, there are basically three categories of board’s report:
|Category I||Category II||Category III|
|Listed Company and Public Company with PUSC of Rs.25 crores or more||Unlisted Company and every public company with PUSC of less than Rs. 25 crores||Small Companies and OPCs|
|All the matters in the Board’s report as specified in Section 134(3) of the CA, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 (‘Account Rules’).||All matters in the Board’s report as specified under section 134 (3) of the CA, 2013 read with Rule 8 of the Accounts Rules except for the following:
“a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors;”
“a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.”
|All the matters in the Board’s report as specified under Rule 8A of the Accounts Rules.|
 PUSC denotes Paid-up Share Capital
If you ever thought your life will be much better and tranquil without a cellphone on you, and without an email to stay connected, well, you may be right, but you cannot function as a director in companies. This is the fallout of the new DIR-3-KYC norms brought by the MCA. The Rules require every director to file the KYC form by 31st August, 2018, post which the Directors’ Identification number (DIN) granted to the director shall be “de activated”. The Rules also lay that such de-activated DIN shall be re-activated only after the person has filed the KYC form.
One of the mandatory requisites of the new KYC form is that the director shall provide his cellphone number, his email id and file the eForm with his/her own digital signature (DSC). If you thought you may provide the cellphone number and email id of your children, or your assistants, you are mistaken, because the form goes on to say that the cellphone number and the email id shall be of the director himself.
Section 153 of the Companies Act makes it mandatory for any prospective director to apply for DIN. While there is nothing in the statute to say that on de-activation of the DIN, the director will lose his office as such, technically called vacation of office, it will not be surprised, if the Government, in its recent impetus to weed out shell companies and dummy directors, barges ahead and challenge the very directorship of such directors whose DINs stood deactivated.
Result – you cannot be a director, unless you have a cellphone number and email id. Legal experts may argue that being director in companies is basic freedom to carry business, as the right to carry business includes the right to carry it in corporate form as well, and there is nothing in the law of the land to make a cellphone or an email an existential necessity. Therefore, if there is a law that forces a corporate professional to have a personal cellphone number/ email- id, the law needs to be questioned.
Not having a personal cellphone is neither an evidence of laity nor anachronism. Several people use a limited insulation from communications technology as a way of life. There is no basis to contend that such persons are not fit to be corporate directors.
It may be argued that the qualifications of a director and the circumstances in which a director automatically vacates his office are all well defined in the law. De-activation of the DIN is not one of such circumstances. It may also be argued that there is an assurance in the MCA DIN rules that the DIN once granted has lifetime validity, and the question of its de-activation does not arise at all.
In order to file this eForm, all directors (Indian and foreign national) will have to obtain/ have their own email id, mobile number, specify the OTP in the eForm and sign with their own DSC. The consequence of false declaration is that the Director shall be liable under section 448 of the Act and under relevant provisions of the Indian Penal Code, 1860 and any other law as applicable, if any statement in the application is found to be false or any material fact is found to be have been omitted.
The MCA rules come in the wake of the Government’s resolve to weed out shell companies and dummy directors. It is apprehended that the 10-lakh odd companies have lots of directors who are men of straw, even though the requirement for DIN was introduced sometime in 2006.
Munmi Phukon, Principal Manager, Vinod Kothari & Company (firstname.lastname@example.org)
The country had witnessed the bulk of show cause notices sent to companies last year seeking evidence on their CSR expenditure, reporting, disclosure etc., though the Ministry’s stand on such notices and replies thereof is not yet known. After CSR, MCA has now seemed to shift its surveillance to the layers of Indian companies and recently started issuing show cause notices to the companies. As claimed in such notice itself, the basis of the same is the annual return filed by the companies. What concerns the most at this time is that, when most of the companies in the country are busy with convening the ensuing AGMs, the preparation/ documentation of bulky reports, aligning themselves with the recent amendments made in the corporate laws, be it the Companies (Amendment) Act, 2017 or the Listing Regulations, the show cause notice is posing as an additional burden. Read more