DIR-3 Know your Client: Certification for Professionals

DIR-3 KYC for Professionals

Know your customer, alternatively acknowledged as know your client or KYC, is the process of a business identifying and verifying the identity of their clients. 

The Central Government has drawn-out the policy of KYC (Know Your Client) for the Directors too. Identical to the Bank KYC, where the government wishes to know the Directors and expect them to submit a yearly intimation before 30th April of every year regarding their KYC and any changes that have been made in the submitted documents.

The Ministry of Corporate Affairs (MCA) has introduced this form with its notification dated 5 July 2018, by announcing an amendment in The Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018.

Related: DIR-3 KYC Update

The KYC form should be mandatorily certified by a practicing professional i.e., CA/CS/CMA. The form should be duly filled by the disqualified directors of an existing company.

In other words, every Director who has an allotted Director Identification Number (DIN) on or before 31st March 2018 and who has an Approved Status in DIN are compulsorily required to file form DIR-3 KYC on or before 31 August 2018. Failing the successful completion of KYC, a penalty of Rs.5000 will be applied from 1 September 2018 along with the DIN being deactivated.

DIN is a unique identification number used for the appointment of a director. A director must retain the DIN for company registration. To obtain DIN it is sufficient to fill the form DIR-3 once for any person who wishes to be a Director of either one or more companies.

Documents/Information Required to apply for KYC

1. Name of the Director
2. Father’s Name of the Director
3. Date of Birth
4. Nationality
5. PAN No.
6. Voter’s ID Number
7. Passport Number (optional)
8. Aadhar Number
9. Driving License Number
10. Personal Mobile Number (for OTP verification)
11. Personal Email ID (for OTP verification)
12. Present Resident Address with proof
13. Permanent resident address with a proof
14. DSC of Director
15. Certification By Practicing Professional like CA/CS/CMA

Proof of the Required Data

1. Information (1-3) mentioned above – PAN
2. Information (4-6) mentioned above – Respective Documents
3. Personal Mobile No – Utility bill/SMS verification, etc
4. Personal email ID – Verified by sending mail and getting the confirmation from the Individual
5. Present resident address – Utility Bill
6. Permanent resident address – Utility Bill – ID Proof

The format of the Certification

I declare that I have been duly engaged for certification/verification of this form. It is hereby certified that:

• I have satisfied myself about the identity of the applicant and his address based on the perusal of the original of the attached document,

Note: In the case where the applicant is residing outside India the particular have to be verified from the documents duly attested by the attesting authority as prescribed

• All required attachments have been completely attached to this application.
• I have gone through the provision of The Companies Act, 2013 and rules thereunder for the subject matter of this form and matters incidental thereto and I have verified the above particulars (Including attachment (s)) from the original records maintained by the Company/applicant which is subject matter to this form and found them to be true, correct and complete and no information material to this form has been suppressed.
• I further certify that:
  • Mobile no. and Email ID belongs to the applicant/director signing the form.
  • All the required attachments have been completely and legibly attached to this form.
  • I have kept a copy of this form and attachments thereto, in my records for further reference.
  • It is understood that I shall be liable for the action under section 448 of The Companies Act, 2013 for the wrong certification if found at my stage.

The format of the Engagement Letter

 To,

Date:

(Name of Professional)
(Firm Name)
Practicing Company Secretary,
COP No.:
Address:

Subject: Engagement for certification e-forms DIR-3 KYC and my representations for verification of information mentioned in the form.

Ref: DIN –

Dear Sir,

This representation letter is provided in connection with your certification/ verification of e-form DIR-3 KYC under provisions of Companies Act, 2013.

With reference to various provisions of the Companies Act, 2013 read with relevant rules and any other applicable laws, I hereby engage you for certification of e-form DIR-3 KYC and verification of details mentioned in the form:

Further, please find below my information/ document required by your good self to verify details mentioned in e-form DIR-3 KYC:

1. Self-attested copy of PAN

2. Self-attested copy of Passport

3. Self-attested copy of Aadhar

4. Mobile No.

5. Email ID

I further confirm that email id & mobile no. are my personal.

All required documents in are produced in original for your necessary verification & attestation.

___________________

(Name of Person)

DIN:

Address:

Procedure for Reactivation of DIN

The DIN will be marked as deactivated with the reason as “Non-filing of DIR-3 KYC” and the person becomes ineligible to sign on any of the e-forms related to the company or get appointed in other pending disqualification.

Reactivation is yet possible subject to the late payment of Rs.5000 and an official action follows for non-compliance.

Related – Update DIR-3 KYC Details of Directors

Key Points to Remember

1. For Indian Nationals, a Passport isn’t a mandatory requirement.
2. For Foreign Nationals, a Passport is a mandatory requirement.
3. The Practicing Professional has to give a declaration of their engagement in Certification/Verification of the form.
4. Compulsory to obtain an Engagement Letter from the Director.
5. All the details should be mentioned in the Engagement Letter under those mentioned in the DIR-3 KYC form.
6. Confirm that the Mobile No. and the Email ID belongs to the Applicant only.
7. Both the director and the practicing professional must keep a copy of the attachments and the form.

Conclusion

Observing the strictness of the government regarding the KYC compliance, it is better to adhere to the guidelines and it’s deadline rather than face any disqualification or penalty.

This is a stringent step taken by the government to keep a close check on Shell Companies. Due to the inhabitance of a large number of shell companies, there has been a sudden increase in fake and non-existent directors which are used for money laundering and alike fraud & illegal activities.

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