Massive relief for whopping 21 lakh defaulting directors in India despite deadline miss

Amid concerns raised by directors over delay in Know-Your-Customer (KYC) filings, the government is likely to allow close to 21 lakh defaulting directors to file the mandatory electronic-KYC form DIN-3 after the last date for complying with the new norm ended on September 15.

Director Identification Numbers (DINs) of nearly 21 lakh directors were deactivated by the Ministry of Corporate Affairs (MCA) following non-filing of KYC details.

“The directors will be given another 15-day extension to reactivate their DINs by filing the e-form along with a nominal fee, which is likely to be much lower than the current late fee of Rs 5,000,” top government sources said. The decision is likely to be announced in a day or two, sources said.

Many individuals and professional bodies, including the Institute of Companies Secretaries of India (ICSI), have written to the government seeking extension in the date of submission for KYC without any additional fee. They have citied practical difficulties such as time-consuming process of obtaining digital signatures, video verification, reaching out to foreign directors and Kerala floods among the reasons for the delay.

After the last date for filing of the e-KYC form, the MCA deactivated DINs of nearly 21 lakh directors, about 63% out of a total of 33 lakh directors registered in the country after they failed to furnish their KYC details. Only 12.15 lakh directors filed their KYC details within the stipulated time.

DIN is the unique number allotted to the directors on the Boards of registered companies without which they can’t sign any compliance document on behalf of the company.

According to some government officials, not more than two lakh directors are likely to come forward if more time is allowed for filing. “A large number of directors will be dummy directors or the ones having multiple DINs,” said an official.

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“It took us an average time of one to one-and-a-half hour to do one KYC filing. It is quite time consuming to get the digital signature and then feed the client details on MCA software. Many a times the site shows glitches,” said Ashok Tyagi, a company secretary, who is looking forward to an extension in the filing time.

The MCA launched the e-KYC form under the MCA 21 system on July 14, this year. All the 33 lakh directors were required to provide their personal details such as e-mail address, Permanent Account Number (PAN) and Adhaar number in an e-filing with the government in a major clean-up drive on ‘fly by night and dummy directors’. The directors also had to upload their short videos introducing themselves. The directors who could not comply with the new rule could, however, get their DINs activated provided they paid a sum of Rs 5,000 as late fee.

Source: DNA Money