DIR-3 KYC Annual Compliance—Detailed Overview

In the complicated world of business governance, it is very important to keep things open and honest. The Ministry of Corporate Affairs (MCA) in India set up the DIR-3 KYC (Director’s KYC) annual compliance to make sure that company leaders are held accountable, and that accurate information is kept about them. This blog post talks about the complexity of the DIR-3 KYC annual compliance process, how important it is, and how it fits in with the wide range of corporate rules.

Meaning of DIR-3 KYC Annual Compliance

The regulatory compliance requirement known as DIR-3 KYC, or Director’s KYC, has been established by the Ministry of Corporate Affairs (MCA) in India. The process involves the yearly verification of the personal and professional information of directors affiliated with companies that are registered within the country.

The primary objective of DIR-3 KYC is to ensure the maintenance of precise and up-to-date documentation about directors, hence fostering openness within the corporate domain, and mitigating the potential misuse of director identification numbers (DINs) for unauthorized or fraudulent activities.

Who needs to file e form DIR-3 KYC?

The MCA has announced that directors who received a DIN by 31 March 2018 and whose DIN is authorized must provide KYC details. This procedure is also required for disqualified directors.

From 2019-20, directors who were assigned a DIN on or before the end of the financial year and whose DIN is authorized must file form DIR-3 KYC by September 30 of the following year.

Methods of Filing DIR-3 KYC

There are two methods of filing DIR-3 KYC: 

DIR-3 KYC Form: A more thorough KYC process is used in the DIR-3 KYC Form, which must be submitted in the following situations:

• A director is submitting their KYC for the first time. 
• Since the previous submission, the director’s information has changed. A practising professional (such as a Chartered Accountant, or Company Secretary) must first certify the director’s self-attestation before the form will accept any further information about the director, including evidence of identification and proof of address. 
• Crucial details can be updated on the form, including the director’s passport number, permanent address, phone number, and other pertinent information

DIR-3 KYC Web: The DIR-3 KYC Web service represents a simplified and efficient version of the traditional KYC (Know Your Customer) procedure. 

• The online verification method provided by this web-based tool enables directors to validate their information as recorded in the database of the MCA in a user-friendly manner.
• Once the initial DIR-3 KYC Form has been submitted, directors have the option to utilize the web service for subsequent years. 
• The functioning of this system depends on the assumption that the director’s information remains unaltered since the last filing. 
• Therefore, it simply necessitates the directors to authenticate their current information using a one-time password (OTP) transmitted to their registered mobile number and email address. 
• The approach effectively obviates the necessity of annually uploading and checking supplementary papers.

Points to keep in mind while submitting the eForm DIR-3 KYC

The following are the checkpoints to consider when filling the eForm DIR-3 KYC:

• When submitting the eForm, it is necessary to enter the individual and distinct personal mobile number and email address of each Director. The verification of this number and email address will be conducted through the utilization of a one-time password (OTP).
• The second verification measure implemented in this context entails the requirement for the director to utilize their digital signature throughout the submission of this electronic form.
• Additionally, a third criterion for ensuring the provision of accurate and comprehensive information is that a practising Chartered Accountant, Company Secretary, or Cost and Management Accountant must certify the e Form.

Documents required to file DIR-3 KYC FORM

Following are the documents required to file DIR-3 KYC FORM:

• Aadhar Number
• Passport
• PAN
• Driving License
• Proof of Residential Address
• Details of Citizenship
• Details of Gender & Date of Birth
• Personal Mobile number & Email Id.

Steps to file DIR-3

The following steps need to be followed to file DIR-3

• Download Form: Download the form from the MCA website.
• DIN: The individual/Director must provide his DIN in the ‘Approved’ KYC form.
• Name and credentials: The candidate must give his and his father’s names. The name entered should match the PAN. The PAN database will verify this address. Short forms, acronyms, and single alphabets are prohibited.
• Nationality: Declaring your nationality is crucial. Foreign firm directors should choose their passport nationality.
• Declaration of age: Enter DD/MM/YYYY format to enter birth date. Filling up this application requires 18+ years of age.
• Address: The permanent residential address must be entered while filling out the form. Check that these facts match the accompanying evidence of permanent address. Foreign pin codes can only be entered if the state is NA. If your current address is different from your permanent address, you must enter it also.
• Permanent Account Number verification: You must declare your PAN. After entering your PAN, click ‘Verify income-tax PAN.’ The system will check your PAN card number. Please note: The form and DSC PAN must match for validation. For validation, foreign nationals without PANs must use the same name on the form and DSC.
• Contact updates and OTP verifications: A personal mobile number, validated by an OTP, is crucial. Country codes other than +91/91/0 are only allowed for not a resident. Also, enter your personal email ID, which will be validated with an OTP. After entering these details, click ‘Generate OTP.’ OTPs will be issued to your phone and email separately.
• Attachment: Proof of permanent address, copy of Aadhar and passport, proof of present address and other conditional attachments to be made.
• e-Form Certification: A practicing Chartered Accountant/Cost Accountant or Company Secretary should digitally sign the eForm. The practising professional’s details and digital signature are crucial. After proofreading, click ‘Submit.’
• SRN:After completing eForm DIR-3 KYC, the user will receive an SRN. This SRN will be used for MCA correspondence.
• Email: The applicant’s email will receive a form receipt approval email. After receiving permission through email, eForm DIR-3 KYC is complete.

Failure to file eForm DIR-3 KYC by the due date

If a director fails to submit the e-Form on the MCA 21 portal by September 30th, the department will designate the Director Identification Number (DIN) of the said director as ‘Deactivated owing to Non-filing of DIR-3 KYC’. If the director desires to reinstate their Director Identification Number (DIN) in the future.

They may do so by submitting the missed e-Form DIR-3 KYC and remitting a late charge up or penalty of Rs 5,000. The payment of this charge is required to be made on or after September 30th of the corresponding year in which the eForm DIR-3 is intended to be submitted. The directors are required to complete this form on an annual basis.

Final Words

The DIR-3 KYC annual compliance process embodies modern governance principles that emphasize transparency, accountability, and accurate record-keeping. By adhering to this process, directors play a pivotal role in maintaining the integrity of India’s corporate landscape. As the MCA continues to refine and evolve its regulations, complying with the DIR-3 KYC requirements becomes an essential part of contributing to a thriving and responsible business environment.