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K.VAITHEESWARAN ADVOCATE & TAX CONSULTANT

COMPANIES ACT, 2013 DIR – 3 – KYC. K.VAITHEESWARAN ADVOCATE & TAX CONSULTANT. Mobile : 98400-96876 E-mail : vaithilegal@yahoo.co.in, vaithilegal@gmail.com. DIN - BACKGROUND. In the past, any person aspiring to be a director can apply for DIN in accordance with the Rules.

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K.VAITHEESWARAN ADVOCATE & TAX CONSULTANT

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  1. COMPANIES ACT, 2013 DIR – 3 – KYC K.VAITHEESWARANADVOCATE & TAX CONSULTANT Mobile: 98400-96876 E-mail : vaithilegal@yahoo.co.in, vaithilegal@gmail.com

  2. DIN - BACKGROUND • In the past, any person aspiring to be a director can apply for DIN in accordance with the Rules. • Unlike in the past, the new provisions contemplate the existence of a Board Resolution of a Company proposing his appointment as a director. • While DIN has been issued in the past and used extensively, MCA has introduced a concept of KYC for directors.

  3. DIR – 3 - KYC • Form No. DIR – 3 – KYC substituted by G.S.R. 558(E) dated 12.06.2018 • As per MCA, any director who has been allotted a DIN by 31.03.2018, which is in approved status will have to submit his KYC details to MCA by 31.08.2018. • MCA vide Notification dated 21.08.2018 has extended the date to 15.09.2018 • Critical features in the Form • For Indian Nationals - PAN mandatory even if there is no change in PAN • Director details should be as per income tax PAN. If details in PAN are incorrect, it is advised to first correct details in PAN • Form has a link for verifying IT PAN • Personal mobile number and sending of OTP • Verification of OTP • Personal mobile number / personal email ID are mandatory fields • Aadhar number / driving license number / voter ID optional

  4. MCA – FAQ ON DIR – 3 – KYC

  5. DIR – 3 – KYC – FAQ – ISSUES • For 2018 – 19, DIR – 3 – KYC by 31.08.2018 and for 2019- 20 onwards DIR – 3- KYC by 30th April of the immediately next financial year ; DIN would be deactivated if not filed and verified by due dates • Earlier system warranted filing of changes • New system contemplates annual filing even if there are no changes? • 31.08.2018 – deadline extended to 15.09.2018 • Foreign nationals • Verification exercise • Address proof • Deactivation

  6. DIR – 3 – KYC – FAQ – ISSUES • Which details are required to be filled in the form? • Name (as per PAN database), Father’s Name (as per PAN database), “Date of Birth (DoB)” (as per PAN database), PAN Number (mandatory for citizens of India),Personal Mobile number and Personal Email Address and Permanent/ Present address. • Further, applicants are required to provide AADHAAR, if not then Voter ID or Passport or Driving licence. Accordingly, copy of any one of the above selected information is to be attached. • It appears that if DIR-3 has to be filed and DIN to be obtained, PAN has to be obtained even if there is no taxable income.

  7. DIR – 3 – KYC – FAQ – ISSUES • Is it mandatory to enter a unique mobile number and email ID in form DIR-3 KYC? • Yes. It is mandatory to enter your personal mobile number and personal email ID in the form DIR-3 KYC and the same has to be verified by an OTP process. • Further, the mobile number and email ID must be unique such that it is not already linked with some other person in the DIN holders’ database. • Send OTP button will be enabled only after successful Pre-scrutiny of the form. After successful Pre-scrutiny, user has to click on ‘Send OTP’ button.

  8. DIR – 3 – KYC – FAQ - ISSUES • I am a disqualified director, am I required to file form DIR-3 KYC? • Yes. Any person who has been allotted DIN and where the status of such DIN is ‘Approved’, is required to file form DIR-3 KYC. Hence, disqualified directors are also required to file form DIR-3 KYC. • Practical aspects • Disqualification • Recent striking off of companies • Person who currently does not want to be a director • Person who has obtained DIN years ago and is not occupying any position as director?

  9. DIR – 3 – KYC – FAQ - ISSUES • Whether non-resident directors can provide Indian mobile numbers? • In case the DIN holder is a resident of India, the address must be an address in India and mobile number must be an Indian mobile number. • In case DIN holder is non-resident, foreign address and foreign number shall only be allowed. • OTP for foreign nationals and non-resident directors • OTP valid for 30 minutes • Time difference / connectivity • Unique email ID • Ease of doing business

  10. DIR – 3 KYC – CERTIFICATION – ISSUES • Professional has to declare that he has been duly engaged for the purpose of certification. • Advisable to obtain engagement letter. • Declaration to the effect that the professional has satisfied himself about the identity of the applicant and his address based on the perusal of the original of the attached document. If the applicant is residing outside India, particulars to be verified from document duly attested. • Notarized apostilled equivalent to original • Form does not make a distinction between foreign and Indian director. • Declaration to the effect that the professional has verified the particulars from the original records maintained by the Company / Applicant and found to be true. • Access • The form is not being filed by the Company • Original records of the Company?

  11. DIR – 3 KYC – CERTIFICATION – ISSUES • Professional has to certify that mobile number and email id belong to the applicant / director signing the form. • Practical aspects • Letter of engagement and declaration from applicant • Professional has to certify that he understands that he shall be liable for action under Section 448 for wrong certification if any found at any stage. • Due diligence • Checks and controls

  12. SECTION 448 • Section 448 deals with punishment for a false statement. • If in any return, report, certificate, financial statement, prospectus, statement or other documents required under the Act or Rules, any person makes a statement which is false in any material particulars knowing it to be false or omits any material fact knowing it to be material it shall be treated as fraud under Section 447. • Section 439 provides that notwithstanding anything in CrPC, every offence except the offence set out in Section 212(6) shall be deemed to be non-cognizable. • Section 212(6) refers to Section 448 and provides that bail would be granted only after hearing the public prosecutor.

  13. PUNISHMENT FOR FRAUD • Section 447 • Without prejudice to any liability including repayment of debt under the Act or under any other law, any person guilty of fraud involving atleast Rs. 10 lakhs or 1% of turnover which ever is less shall be punishable with imprisonment • Term not less than 6 months but may extend to 10 years • If fraud involves public interest, term not less than 3 years • If fraud involves an amount that is less than Rs. 10 lakhs or 1% of turnover and does not involve public interest, imprisonment upto 5 years or fine or both

  14. FRAUD

  15. WAY FORWARD • KYC as a concept is being applied in the context of directors through the new initiative • From a legal and a stake holders’ standpoint, it is a relevant exercise • The following should be considered for making it simple and effective: • The exercise need not be annual and should be necessitated only when there are further changes • A person filing DIR – 3 – KYC should be able to see the particulars filed and accepted • While searching about any director using the DIN or name, if KYC had been filed, that data must also be seen • An alternative easier system should be identified for foreign directors since the mobile number, OTP etc. are complex procedures on account of time difference

  16. THANK YOU K.VAITHEESWARANADVOCATE & TAX CONSULTANT Mobile: 98400-96876 E-mail : vaithilegal@yahoo.co.in / vaithilegal@gmail.com

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