Background

In 2018, the Ministry of Corporate Affairs (MCA) in India introduced the DIR-3 KYC requirement to strengthen transparency in the country's corporate sector. This regulation aligns with Know Your Customer (KYC) norms and applies to directors of all registered companies in India. Understanding its implications is crucial for company directors, as it's become a vital aspect of India's compliance landscape.

According to Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, every individual assigned a DIN as of March 31st of a given financial year must submit their KYC by September 30th of the following financial year.

 

What is DIR-3 KYC?

To combat fraudulent activities, the MCA introduced the DIR-3 KYC form. This mandates that every director holding a Director Identification Number (DIN) as of March 31st of a financial year must submit their KYC details to the MCA.

Objectives of DIR-3 KYC

The primary goal of DIR-3 KYC compliance is to maintain an accurate database of all individuals serving as directors in Indian companies. This, in turn, enhances the accountability and transparency of these companies.

Methods for Filing DIR-3 KYC

The MCA offers two filing methods, each catering to specific scenarios:

  • DIR-3 KYC Form: This is a more comprehensive KYC process required in the following situations:
    • A director is filing their KYC for the first time.
    • There have been changes to the director's details since the last filing.
  • DIR-3 KYC Web: This is a simpler and faster online verification process suited for directors who:
    • Have already filed the DIR-3 KYC Form.
    • Haven't had any changes to their email address or mobile number since the last filing.

Requirements for DIR-3 KYC

The required details for DIR-3 KYC include:

  • Personal Information: Full name, father's name, date of birth.
  • Identification Details: PAN card (Indian citizens) or Passport (foreign nationals).
  • Contact Information: Address, email address, and phone number.
  • Nationality and Citizenship Status
  • Proof of Documents:
    • Identity: Self-attested copy of PAN card (Indian) or Passport (foreigner).
    • Address: Recent utility bill, bank statement, or property tax receipt.

Due Date for DIR-3 KYC Filing (Financial Year 2023-24)

E-Form

Purpose

Timeline

Due Date

Remark

DIR-3 KYC Form

KYC for Directors

Annual Compliance

September 30, 2023

Applicable to DIN holders as of March 31, 2023, who haven't filed previously or have changes in details.

DIR-3 KYC Web

KYC for Directors

Annual Compliance

September 30, 2023

For directors who previously filed DIR-3 KYC and have no changes in email or phone number.

 

Consequences of Non-Compliance

Failure to comply with DIR-3 KYC regulations can lead to the deactivation of a director's DIN. This significantly impacts their ability to participate in company management, as a deactivated DIN prevents them from signing legal documents on the company's behalf. Additionally, reactivating a deactivated DIN is not a simple process and involves a penalty of Rs. 5000. The deactivation can only be revoked after submitting the overdue KYC information along with the penalty.

DIR-6 Compliance: Updating Director Information in India

Complimentary to DIR-3 KYC, the Ministry of Corporate Affairs (MCA) also mandates DIR-6 compliance in India. This regulation focuses on maintaining accurate and updated director information within the MCA database.

When is DIR-6 Required?

Unlike the annual requirement of DIR-3 KYC, DIR-6 needs to be filed whenever there's a change in a director's particulars. These changes can include:

  • Personal Information: Name, Father's Name, Date of Birth
  • Contact Information: Address, Email Address, Phone Number
  • Identification Details: PAN (Indian Nationals) or Passport (Foreign Nationals)
  • Other Relevant Data: Nationality, Educational Qualifications etc.

Timeframe for Filing DIR-6

The MCA mandates filing DIR-6 within 30 days of any change in the director's particulars. This ensures the MCA database remains up-to-date and reflects the latest director information for each company.

Who Can File DIR-6?

The responsibility to file DIR-6 lies with the director whose information has changed. However, in some cases, the company secretary or a designated partner (in the case of LLPs) can also file the form on the director's behalf.

Process for Filing DIR-6

DIR-6 is an electronic form that must be filed on the MCA portal. The process involves:

  1. Accessing the MCA portal with login credentials.
  2. Selecting the "DIR-6" form and filling in the required details about the director and the changes.
  3. Uploading scanned copies of documents that support the changes being reported.
  4. Submitting the form after verification and payment of any applicable fees.

Consequences of Non-Compliance

Failure to file DIR-6 within the stipulated timeframe can lead to penalties imposed by the MCA. Additionally, it can create discrepancies in the MCA records, potentially causing delays in company filings or other business operations.

Conclusion

DIR-3 KYC and DIR-6 compliance are essential for maintaining transparency and ensuring accurate information about company directors in India. By understanding the requirements and timelines for each, directors and companies can ensure they are compliant and avoid any potential issues.