Director identification number (DIN) is a unique identification number given to a person wanting to be a director or an existing director of a company. In this digitised era, application in eForm DIR-3 was sufficient to obtain DIN. This was a one-time process for any person who wants to be a director in one or more companies. However, now with the move of the Ministry of Corporate Affairs (MCA) to update its registry, all directors with a DIN will have to submit their KYC details annually in eForm DIR-3 KYC.
Filing DIR 3 KYC is not just a regulatory requirement but a crucial step for directors and companies to maintain their active status.
Who is required to file DIR-3 KYC form?
For Financial year 2018-19 – Any person who has been allotted “Director Identification Number (DIN/DPIN)” on or before 31st March 2018 and the status of such DIN is ‘Approved’, needs to file form DIR-3 KYC to update KYC details in the system on or before 5th October 2018.
For Financial year 2019-20 onwards – Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is ‘Approved’, would be mandatorily required to file form DIR-3 KYC before 30th September of the immediately next financial year.
After expiry of the respective due dates, 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’.
Here we discuss the consequences of not submitting DIR 3 KYC, trying to understand the impact it has on both directors and companies.
Due Date for filing DIR 3 KYC is 30th September every year.
Understanding these consequences underscores the importance of timely compliance with this vital obligation.
The rule for DIR 3 KYC was notified with effect from July 10th, 2018. Every director who has been allotted a DIN on or before March 31st of a financial year must submit e-form DIR-3KYC to the Central Government.
If a person fails to file DIR-3 KYC by the due date, the MCA21 system will mark their DIN as ‘Deactivated,’ citing the reason as ‘Non-filing of DIR-3 KYC.’ After the due date, filing of DIR-3 KYC in respect of such deactivated DINs will be allowed upon payment of a specified fee of Rs. 5,000, without prejudice to any other actions that may be taken.
However, the main question for discussion is: what are the consequences/effects/impacts on a company if any director fails to file their DIR-3 KYC?
Impact on Director:
If a person fails to file DIR-3 KYC, their DIN will be ‘Deactivated’ in the records of the MCA. The following are the impacts on directors:
i. They can’t be appointed as a director in any new company or LLP.
ii. They can’t resign from any company or LLP.
iii. They can’t mention their DIN on any document related to the company.
Impact on Company:
i. The company will not be able to file any annual forms, such as AOC-4 and MGT-7, with the ROC.
ii. The company will not be able to file any other forms with the DSC of a director whose DIN has been deactivated.
iii. The company will not be able to have any documents signed by such a director or mention their DIN number.
CONCLUSION: Filing DIR 3 KYC goes beyond the submission of a form; it safeguards the active status of both directors and companies. Here we try to highlight the necessity of timely compliance, as filing within the due date incurs no additional fees. However, delay in filing triggers not only monetary penalties but also operational limitations.
So all you directors, take note and ensure your DIR 3 KYC is completed within due date.
For more details, please reach out to us on our Toll Free number 1800 889 6140 or write to us at info@arkadvisorsllp.com to book an online consultation.
Let’s be compliant!!!