DIR-3 KYC (Director KYC) is a key compliance requirement under the Companies Act, 2013 for individuals holding a Director Identification Number (DIN). It was introduced by the Ministry of Corporate Affairs (MCA) to ensure that the directors of companies are correctly identified and to prevent misuse of the DIN (Director Identification Number).

The process of DIR-3 KYC involves the submission of Know Your Customer (KYC) details by all individuals who hold a DIN, including directors of both private and public companies. The aim is to improve transparency, ensure compliance, and enhance the integrity of the corporate governance system in India.

What is a Director Identification Number (DIN)?

A DIN is a unique identification number assigned to individuals who are appointed as directors in any company. It is a mandatory requirement for anyone wishing to become a director in an Indian company.

The DIN is issued by the Ministry of Corporate Affairs (MCA) after the individual applies for it using Form DIR-3. This number is permanent and remains valid throughout the director’s tenure, regardless of changes in the company or the individual’s role.

What is DIR-3 KYC?

DIR-3 KYC is the process through which all individuals holding a DIN are required to submit their KYC (Know Your Customer) details annually to the Ministry of Corporate Affairs (MCA). This process ensures that the government has up-to-date records about directors to maintain transparency and ensure that the DIN is not misused.

The DIR-3 KYC process was first introduced in 2018 as a mandatory annual filing. The purpose is to keep track of the directors’ details and verify their identities with official documents.

Key Requirements for DIR-3 KYC

• Who Must File DIR-3 KYC?

1. All directors who have been allotted a DIN by the MCA are required to file their DIR-3 KYC. This includes directors of both private and public companies, whether active or inactive.
2. The DIR-3 KYC must be filed for every calendar year.

• KYC Details to be Submitted:

1. The applicant needs to provide their full name together with address and date of birth and nationality.
2. The record contains mobile contact information and email address.
3. The identity of the director can be verified using a document proof system including photocopies of Aadhar card, passport, voter ID and various documents that illustrate his permanent address including utility bills and bank statements.
4. A mandatory requirement for KYC is the PAN card details from the company director.

• Deadline for DIR-3 KYC:

1. Each year directors were bound to file DIR-3 KYC by the date of August 31st.
2. Penalties might be enforced when DIR-3 KYC remains unsubmitted beyond its deadline.

How to File DIR-3 KYC?

• Login to MCA Portal: MCA.gov.in website provides the official platform for users to access their system. Login requires credentials.

• Fill DIR-3 KYC Form: DIR-3 KYC form can be downloaded from the MCA portal. The form is to be filled by the director with the personal and contact details as necessary.

• Attach Supporting Documents: The director must attach a copy of their PAN card, Aadhar card (or any other government-issued identity), and proof of address.

• Verification via OTP: An OTP (One-Time Password) will be sent to the director’s mobile number and email address for verification.

• Submit the Form: After completing the form and attaching the necessary documents, the director must submit the DIR-3 KYC form.

• Acknowledge Confirmation: After submission, the director will receive an acknowledgment from the MCA.

What Happens if DIR-3 KYC is Not Filed?

If a director fails to file the DIR-3 KYC form within the prescribed time, the DIN may become deactivated. If the DIN is deactivated, the director will not be allowed to act as a director in any company. In such cases, the company cannot appoint or re-appoint the director until the DIR-3 KYC is filed and the DIN is reactivated.

DIR-3 KYC Filing for Disqualified Directors

In case a director’s DIN is disqualified or deactivated due to non-compliance with the KYC filing, they must submit the DIR-3 KYC form to reactivate their DIN. Once the KYC details are filed, and all dues are cleared, the DIN can be reactivated.

DIN KYC vs. DIR-3 KYC

The terms DIN KYC and DIR-3 KYC are often used interchangeably but technically refer to the same process. Both terms refer to the process by which a director submits their personal and professional details to the Ministry of Corporate Affairs for verification and record-keeping.

MCA: Ministry of Corporate Affairs

Through its mandate the MCA (Ministry of Corporate Affairs) operates as India's government body to manage corporate affairs within the nation. The MCA directs its oversight to manage all corporate entities that include private limited companies and public limited companies as well as limited liability partnerships and other types of corporate organizations.

The MCA maintains control over corporate activities by requiring both Companies Act 2013 compliance and additional related legislative adherence. Through the MCA portal the organization tracks business data and preserves registration records about companies together with their directors.

The MCA portal enables directors and shareholders together with stakeholders to use its centralized system for the following purposes:

• Apply for a DIN.

• Users need to submit forms including DIR-3 for DIN, annual return MGT-7 and multiple other required documents.

• Submit financial statements.

• The organization needs to conduct annual return compliance checks along with necessary statutory requirements filing.

Conclusion

The Ministry of Corporate Affairs through DIR-3 KYC implements a vital requirement for directors who need to verify the records that maintain their Direct Identity Number status. The MCA depends on DIR-3 KYC to achieve transparency goals that minimize DIN misuse and maintain proper corporate governance.

Completion of DIR-3 KYC filing in time provides directors with eligibility to continue their directorate positions in their companies. Periodic checks on the MCA portal about KYC deadlines along with filing procedures are vital for directors to prevent penalties or complications in their corporate duties.

Businesses and directors must uphold compliance with DIN KYC in addition to MCA requirements to maintain their solid legal position along with minimizing corporate operational delays.

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