KYC non-compliance: Identification numbers of 21 lakh directors will be deactivated by the government

According to a senior official, the identification numbers of almost 21 lakh directors of various companies will be deactivated by the government of India, as they fail to comply with KYC (Know Your Customer) norms.

The Director Identification Numbers (DINs) is a unique number allotted to individuals who are eligible to have directorship on the boards of registered companies, are deactivated.

Their Director Identification Numbers (DINs) will be re-activated after a paying a penalty of Rs 5,000 along with the requisite form. It also mentioned that the concerned individuals concerned might also face action.

This latest move by the Corporate Affairs Ministry also comes at a time when the government has intensified the crack down on shell companies, that are suspected to be conduits for illicit fund flows.

In June this year, the Corporate Affairs Ministry decided to carry out KYC (Know Your Customer) process for all directors, including those who have been disqualified. The last date for complying with the new norms by way of submitting form ‘DIR-3 KYC’ without fee was 15 September 2018.

Out of 33 lakh active directors, only around 12.16 lakh directors completed the KYC process.The remaining 21 lakh individuals failed to comply with the requirement, said the senior ministry official.

The ministry notified this in a communication on its website, “The process of deactivating the non-compliant DINs is in progress and is likely to be completed by September 17, 2018.”

Once the 15 September 2018 deadline is over, the MCA 21 system would mark all approved DINs — allotted on or before March 31 this year — against which DIR-3 KYC form has not been filed as ‘deactivated’. According to the ministry, ‘non-filing of DIR-3 KYC’ will be the reason for deactivation of the DINs.

Stakeholder use MCA 21 to submit requisite filings to the ministry.

In a separate communication by the ministry, which is implementing the Companies Act, the form may be filed ‘in respect of such deactivated DINs only with a fee of Rs 5,000, without prejudice to any other action that may be taken’.

In the year 2017, the Corporate Affairs Ministry had disqualified more than three lakh persons from holding directorship at registered companies amid the fight against illicit fund flows. These disqualified individuals were directors at firms that were not conducting out business activities for a long period of time.

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