Extent Date of DIR 3 DIN KYC Filing Date Till 30th October 2018

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To,

The Hon’ble Secretary MCA,

The Hon’ble Minister Shri. Arun Jaitlyji,

The Hon’ble PM Shri. Modiji and his learned PMO

ISSUE:

  1. With reference to the Notification dt. 05/07/2018, with respect to the amendment of Companies (Appointment and Qualification of Directors) Rules, 2014 regarding filing of Form DIR-3-KYC by all DIN Holders.
  2. No extension of last date for filing form DIR-3 KYC without fee, beyond 15th September 2018.
  3. The process of deactivating the non-filing DIN holders, unless penalty of Rs. 5000

 At the outset, the DIN KYC process is much appreciated and will bring in lot of transparency and actionable data to the Ministry and its functioning.

Currently, we will deal with the issue in hand regard to extension of due date, halting the deactivation process and reducing the penalty.

CURRENT POSITION:

According to media reports, out of 33 lakh “approved” din holders only 35% was able to file the KYC with in stipulated date (15/09/2018).

Which means 21.5 Lakh (65%) “approved” din holders are under risk of DIN deactivation and will be forced to pay the penalty of Rs. 5000 (more than Rs. 1,000 crore)

“Approved” DIN holders means the directors whose company’s ROC annual filing compliances is upto date. They are NOT the directors whose company was striked off last year.

This shows that they are compliance based and rule-abiding entrepreneurs and companies.

Few media reports on 16th September mentioned that these 65% directors may be ghost directors like drivers, domestic help etc. These statements are baseless and to be reverted.

STEPS INVOLVED IN DIR3 DIN KYC FILING

We will now look into practical difficulties involved in the KYC process, which should be liberally considered while considering the petition.

  1. Arranging the attested KYC documents by company directors- 1 day
  2. Application for Digital signature- 2 days
  3. Mobile and video verification – 2 days (new rule, very time consuming and unreliable)
  4. Getting the DSC approval and receiving the dsc at din holder address- 2 days
  5. Register the DSC with MCA site – 1 day
  6. Filling of eForm, attaching dsc – 1 day (As 70% of the din holders are using the dsc for first time, this is a very time consuming and confusing process)
  7. PAN verification, DIN OTP – 1 day (Most of the time, servers were unresponsive or error prone)
  8. Professional certification, Uploading the eform (servers were unresponsive or error prone)

Above process shows that KYC for a single director involves minimum of 10 working days. If even a single step is delayed or stuck, half of the process to be repeated again.

Above all, the version of the DIR 3 form was altered 3 to 4 times in 30 days span, this added to the delay in process.

REASON WHY EXTENSION IS PROPOSED

  1. The KYC process involves multiple steps and confusing for a new DSC user
  2. Till 2017 only single director with DSC could handle the company compliances
  3. Busy Startups and SMEs came to know of the KYC very late, as there was no awareness programme initiated by the Govt.
  4. Most of the DIN holders are from Tier 2 & Tier 3 cities and towns, their awareness of compliance and using of technology is not upto the mark
  5. The KYC was launched when the professionals like Company secretaries and Chartered accountants were preoccupied, rather over burdened with Income Tax return filing and ROC filings.
  6. The role of professionals is very crucial in such nationwide compliance drive, the Govt. has not taken them into confidence and representations by think tanks like ICSI & ICAI for extesion have been ignored
  7. Multiple variations in the DIR 3, which obstructed the process multiple times
  8. PAN verification was unavailable for many days
  9. OTP generation was obstructed
  10. DSC certifying authorities were unprepared for such sudden demand in digital signature procurement, hence their system slowed the filings
  11. The MCA portal and server was unable to take such huge loads of form filing and slowed at crucial times during the days and during last 3-4 days it almost stopped functioning.
  12. Thousands of applications could not be uploaded even after getting the OTP
  13. The DIN deactivation will impact the forthcoming ROC annual return filings, which will lead to further non-compliance, which is not the intension of the learned authorities.
  14. The trust of the Startup and small business need to be restored in the functioning of the Govt. system. The aggression and penalty shall not be so much that they may deviate from functioning as organised structures.

VIABLE SOLUTION FOR CONSIDERATION

As demonstrated above these 21.5 lakh DIN holders are rule-abiding and innocent directors, who help the economy to grow.

The DIN KYC is a good process and giving fair opportunity to all will help the Govt. to get reliable data for future use. This is not a time sensitive, do or die kind of compliance, hence few more weeks of extension will not hamper anything.

Hence with folded hands we all the Petitioners pray before Hon’ble Secretary MCA, Hon’ble Minister Shri. Arun Jaitlyji, Hon’ble PM Shri. Modiji and his PMO to:

  1. Extent the date of DIR 3 DIN KYC filing date till 30th October 2018
  2. Declare that this will be a final opportunity and any further delay will attract Rs. 100 per day which may extend upto the maximum of Rs. 5000 or
  3. Any better solution which may lead to a fair opportunity of KYC filing to DIN holders

Humble Request to Petitioners:

  • The comments while signing the petition to be related, only to problems faced during compliance.
  • No political statements or baseless remarks to be made

As the purpose of the Petition, is to showcase the genuine need of the Startups, SMEs, Entrepreneurs and professionals, and support the MCA to come up with a win-win solution to all the stakeholders

Signed & Initiated by Cs. Bala Nadar

 



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