In Companies Act, 2013 and rules, the concept of Director KYC was proposed. The Ministry of Corporate Affairs (‘MCA’) vide its Notification in which MCA notifies DIR-3-KYC and rules for Furnishing of KYC by directors[ Notification No. 615(E) Dated July 05, 2018 ] has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2018 w.e.f. 10.07.2018. By this Amendment, MCA inserted a new Rule namely ‘Rule 12A’ regarding Director KYC. There was a lot of amendments in the Companies (Appointment and Qualification of Directors) Rules, 2014 in the year 2018 and 2019 which has been re-presented herein. However, we would like to confer the actual position of Director KYC which is operate as on date, which are as under: –
As per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014,
“Every individual who holds a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall, submit e-form DIR-3-KYC for the said financial year to the Central Government on or before 30th September of immediate next financial year.
Provided that every individual who has already been allotted a Director Identification Number (DIN) as at 31st March, 2018, shall submit e-form DIR-3 KYC on or before 5th October, 2018.”
Provided further that where an individual who has already submitted e-form DIR-3 KYC in relation to any previous financial year, submits web-form DIR-3 KYC-WEB through the web service in relation to any subsequent financial year it shall be deemed to be compliance of the provisions of this rule for the said financial year.
Provided also that in case an individual desires to update his personal mobile or the e-mail address, as the case may be, he shall update the same by submitting e-form DIR-3 KYC only.
Provided also that fee for filing e-form DIR-3 KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, shall be payable as provided in Companies (Registration Offices and Fees) Rules, 2014.”.
Crux of the Provisions of Director KYC: –
1. Filing of DIR-3-KYC for each financial year is compulsory further for person who has beforehand filed DIR-3-KYC for the previous financial year.
2. From financial year 2018-19, if any individual has already raised DIR-3-KYC for the previous financial year, certainly there is no require to file DIR-3-KYC. In this case, he has to raise only DIR-3 KYC-WEB through the web service. Web-form DIR-3 KYC-WEB through the web service is to be consumed by the DIN holder who has submitted DIR-3-KYC in the previous financial year and no update is required in his/her details.
3. Besides, in case there is a modify in mobile no. or e-mail address, the DIN holder has to file DIR-3-KYC after filing DIR-6 for updating of change in particulars.
4. Due date for filing DIR-3-KYC or DIR-3 KYC-WEB through the web service, as the case may be, for Financial Year 2019-20 shall be 30th September 2020.
5. DIR-3-KYC or DIR-3 KYC-WEB through the web service, as the case may be, if filed within the due date of the respective financial year, NO FEE is payable. However, fee payable in delayed case is Rs. 5000/-.
Further note that there were also amendments in Rule 11 of the Companies (Appointment and Qualification of Directors) Rules 2014. It was inserted and later on amended that after end of the due date by which DIR-3-KYC or DIR-3 KYC-WEB through the web service, as the case may be, is to be filed.
The MCA will note all approved DINs has not been filed the e- form and Web form then denoted as ‘Deactivated’ with the reason as non filing of DIR -3 KYC and DIR-3 KYC WEB’ then additional fee shall be charged of Rs. 5000/-.
Director KYC and “Companies Fresh Start Scheme, 2020 (CFSS-2020)”
Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID 19, there is delay in filing of various forms which are provided under the Act. In view of this, MCA has taken special measures under Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of the COVID -19 outbreak vide General Circular No. 11/ 2020 dated 24th March, 2020.
In order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, some measures have been implemented by the MCA to reduce their compliance burden and other risks. In Para I of the said Circular-
“No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a ‘fresh start’. The Circulars specifying detailed requirements in this regard are being issued separately.”
In view of the special measure provided by MCA vide General Circular No. 11/ 2020 dated 24th March, 2020, a moratorium period from 1st April, 2010 to 30th September, 2020, has been provided by MCA, by which no additional fess shall be charged for late filing during the said moratorium period.
It is submitted that As per Rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014, the due date Due date for filing e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, for Financial Year 2019-20 shall be 30th September 2020. Therefore, there is no benefit of General Circular No. 11/ 2020 dated 24th March, 2020.
However, as per relaxation provided by MCA vide General Circular No. 11/ 2020 dated 24th March, 2020, be lated e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service (for the financial year ended on 31st March 2019, the individual have to submit e-form DIR-3-KYC or web-form DIR-3 KYC-WEB through the web service, as the case may be, on or before 14th October, 2019),can be filed during a moratorium period from 1st April, 2010 to 30th September, 2020, without additional fees for late filing during the said moratorium period.
Further, it is mentioned in the said circular that the Circulars specifying detailed requirements in this regard are being issued separately. In furtherance of the Ministry’s Circular No. 11/2020, dated 24th March, 2020 and in order to facilitate the companies registered in India to make a fresh start on a clean slate, MCA has decided to take certain alternatives measures for the benefits of all companies.
So, MCA came out with a detailed Scheme namely, “Companies Fresh Start Scheme, 2020 (CFSS-2020)”vide Circular No. 12/2020 dated 30th March, 2020. The said CFSS-2020 automatically override moratorium period provided by General Circular No. 11/ 2020 dated 24th March, 2020.
The MCA has uploaded a list of 76 forms (including for companies and LLPs) for which the benefit of the Scheme CFSS-2020 can be availed. Director KYC is also included in the list to avail the benefits under CFSS-2020.
The said CFSS-2020 is applicable between the 1st of April, 2020 and the 30th of September, 2020.Therefore, company will be able to file remaining forms, compliances till 30th September, 2020. The said Scheme CFSS-2020 is a golden opportunity for the defaulting companies to clear their slate and to make good any filling related defaults, irrespective of the duration of defaults, without any additional fees/ penalty / prosecution and make a fresh start as a fully compliant entity.
However, under said Scheme CFSS-2020, there is one additional compliance which a company have to abide by i.e. company has to file a FORM CFSS-2020 after closure of scheme and after the document(s) are taken on file, or on record or approved by the designated authority as the case may be but not after the expiry of six months from the date of closure of the scheme. There shall not be any fee payable on this Form.
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
