What is DIR-3 KYC for Directors and NRI Directors?

Any individual who intends to be a director or who is already a director of an Indian company is assigned a DIN (Director Identification Number). Such DIN holders need to submit their KYC details using the form DIR-3 KYC to the MCA once every three years. It is to ensure the director's data accuracy in the MCA's registry, enhance transparency, avoid fraud, and maintain an active DIN. The due date for filing the DIR-3 KYC form is the 30th of September. Failing to file by the deadline can lead to the deactivation of DIN, a penalty of Rs. 5,000, and even disqualification from signing statutory filings. 

There are two different modes for filing an application for KYC for directors: e-form DIR-3 KYC and web-based DIR-3 KYC. The e-Form DIR-3 KYC is a detailed form used by first-time filers or individuals who need to update or change the information. The DIR-3 KYC web is used by directors who have already submitted their KYC in the previous year, and the details are unchanged. 

Visit the MCA portal to file DIR-3 KYC, and the filing process is largely the same for Indian residents, foreign nationals, and NRIs. However, there may be some additional requirements for foreign nationals and NRIs due to their international residency. In this blog, we will cover everything you need to know about DIR-3 KYC. 

What is DIR-3 KYC?

A Director Identification Number (DIN) is a unique number allotted to an individual who is already a director or intends to become one in an Indian company. The Ministry of Corporate Affairs (MCA) requires the DIN holders to submit their KYC details using form DIR-3 KYC once every three years. 

Individuals who hold a DIN need to use Form DIR-3 KYC to update and verify their details with the Ministry of Corporate Affairs (MCA). Complying with the 'Know Your Customer' requirement is mandatory to ensure the accuracy of director data in the MCA's registry. It also enhances transparency in corporate governance and helps avoid fraudulent activities by maintaining up-to-date records. Failing to file within the due date can lead to a penalty of Rs. 5,000. 

What are the Types of DIR-3 KYC Filings?

There are two different modes for directors to file their KYC, based on whether they are filing for the first time or reconfirming the previously submitted details. Here are the types of DIR-3 KYC filings: 

DIR-3 KYC (e-form Filing)

It is a comprehensive, downloadable e-form used when the directors need to file KYC with new or updated information. It must be filed when:

• Filing DIR-3 KYC for the first time.
• DIN is deactivated due to past non-filing, and you need to reactivate it. 
• There are changes in the details since your last filing. It includes changes in email, mobile number, PAN, address, etc. 

DIR-3 KYC Web 

It is a simplified web-based type for directors who have submitted their KYC already in any of the previous years, and there are no changes to report. It must be filed when:

• DIR-3 KYC has already been filed at least once.
• Details are unchanged, and DIN (Director Identification Number) is in 'Approved' status. 

*Note: It is not available for first-time filers or for DINs that are deactivated. 

Who Must File DIR-3 KYC?

Here are the individuals who must file DIR-3 KYC:

• Individuals who have been assigned a DIN on or before the 31st of March of a financial year. 
• If a person holds a DIN, they must complete the KYC, regardless of whether they are currently a director in any company. 
• Indians, foreign nationals, and NRIs holding a DIN must file the DIR-3 KYC. 

What are the prerequisites for Filing DIR-3 KYC?

It's important to ensure you gather and fulfill all prerequisites before filing DIR-3 KYC, whether using the e-form or web method. This will help you prevent any delays, rejections, or penalties during the process. Here are the prerequisites for filing DIR-3 KYC:

Valid Direct Identification Number (DIN) 

• On the MCA portal, your DIN status must be 'Approved' as of the 31st of March of the relevant financial year. You can verify the same by visiting the MCA DIN search portal and entering your DIN or PAN. 
• In case your DIN shows 'Deactivated due to non-filing of KYC', file DIR-3 KYC using the e-form method. A penalty of Rs. 5,000 will be levied for reactivating your DIN.

Digital Signature Certificate (DSC)

• For DIR-3 KYC for filings, submit a valid Class 3 Digital Signature Certificate (DSC) issued in the name of the director.
• The DSC must be registered and linked to your MCA user ID. Check it through the MCA Portal > MCA Services > DSC Service V3. 
• The DSC must be current, as expired and unregistered DSC can lead to form rejection. 

Documents Required to File DIR-3 KYC

To authenticate the director's identity and current contact details, certain self-attested copies of personal documents must be submitted. The MCA uses these documents to verify the authenticity of the director's credentials and ensure that the details in the official records are correct and recent. Here are the documents required by foreign nationals and Indians:

• PAN card
• Aadhaar card (if applicable for resident Indian directors)
• Passport (mandatory for NRIs and foreign nationals)
• Email address and contact details
• Recent passport-sized colored photographs
• Proof of present address (Utility bill, bank statement, or ration card) 

Ensure that all the documents are in PDF format, legible, and self-attested. 

How to File DIR-3 KYC?

The process of filing DIR-3 KYC online depends on whether you are a first-time filer or if you filed last year. For first-time filers or those updating the details, use e-form DIR-3 KYC. For individuals who have already filed it in the previous year and no changes are required, file DIR-3 KYC using the web-based method. Understanding the difference between Form DIR-3 KYC and DIR-3 KYC web is important to ensure a smooth and penalty-free process. Here are the steps to file via both DIR-3 KYC (e-form) and DIR-3 KYC (web-based):

DIR-3 KYC (e-form)

Follow the steps below to file the e-form DIR-3 KYC 

Step 1: Download the e-form DIR-3 KYC

• Visit the MCA portal. Find the MCA service option > Company e-filing. Company forms download. 
• Download the latest DIR-3 KYC form along with the instruction kit. 

Step 2: Enter the director's details and attach the Documents 

• Open the downloaded form in Adobe Reader and fill it in with the required details. 
• Enter your full name, father's name, nationality, birth date, permanent and present address, and contact details. 
• Attach self-attested scanned copies of the required documents, including PAN, aadhaar, address-proof, photographs, etc. 

Step 3: OTP-Based Verification

• Click on the 'Generate OTP' option for both email and mobile. Enter the received OTP and ensure the contact details are similar to the previous filings on MCA records. 

Step 4: Affix Digital Signature

• Attach the DSC of the directors, which must be digitally certified by a practising professional, such as a CA, CS, or CMA. Enter the membership number, COP number, and their DSC also. 

Step 5: Upload the e-Form 

• Log in to the MCA portal using your credentials and upload the completed and digitally signed DIR-3 KYC form.
• Before proceeding, in case your DIN was deactivated due to non-compliance, pay a penalty of Rs. 5,000. 

Step 6: SRN Generation & Acknowledgment 

• Upon successful submission, a service request number (SRN) will be generated. Download and use the SRN to monitor the filing status. 

DIR-3 KYC (Web-Based) 

Follow the steps below to file DIR-3 KYC using the web-based method if you have filed KYC last year and your DIN is in 'Approved Status':

Step 1: Access the DIR-3 KYC Web Service

• Visit the MCA DIR-3 KYC web filing page. 
• Find the MCA Services > Company e-filing > DIN Related Forms > Form DIR-3 KYC Web.

Step 2: Fill in DIN and Complete OTP Verification

• Enter your DIN, and the portal will automatically fill in your registered mobile number and email ID. 
• Click on 'Send OTP' for both and enter the received OTPs to validate. 

Step 3: Submit the Verification

• Tick the declaration checkbox and click on 'Submit'.
• A service request number (SRN) will be generated upon successful submission. Also, download the acknowledgment receipt. 

For the web-based KYC method, a DSC or professional certification is not required. 

What are the Consequences of Non-Compliance with DIR-3 KYC?

If a director fails to file the e-form DIR-3 KYC on the MCA portal by the 30th of September, it can have significant consequences:

• DIN Deactivation: The Director Identification Number will be marked as 'Deactivated due to non-filing of DIR-3 KYC'. 
• Penalty Fees: A penalty of Rs. 5,000 will be levied for reactivating the DIN.
• Disqualification to Sign ROC Forms: Deactivated DINs make directors ineligible to sign statutory filings. 
• Directorship Exclusion: Continued non-compliance may restrict the director from performing duties due to DIN deactivation but does not directly result in disqualification. 

What is DIR-3 KYC for Non-Resident Directors?

NRIs (Non-Resident Indians) frequently take part in Indian businesses as founders, investors, or board members. As a result, they also need to adhere to the DIR-3 KYC requirements to maintain active directorship status. 

Although the DIR-3 KYC filing process is largely the same as that for resident directors, NRIs often need to provide additional documents for their overseas residency. Here are some common situations where DIR-3 KYC applies to NRI directors:

NRI Founder of an Indian Startup

Many NRIs establish startups in India while staying abroad. If the NRI holds the position of director in the company, they must file DIR-3 KYC once every three years to keep their DIN active. It is important for signing corporate filings and maintaining legal authority within the company. 

NRI Investor Serving as a Director

In some situations, NRIs invest in Indian companies and join the board as directors. Such investor-directors are also required to file DIR-3 KYC once every three years. This helps ensure that their identity and contact details remain verified in the MCA database. 

NRI Promoters Operating Businesses Remotely 

While residing abroad, some NRI promoters operate Indian businesses remotely. They need to comply with DIR-3 KYC requirements, even if they are not physically present in India. It is vital to maintain an active DIN to keep participating in corporate decision-making. 

NRI Professionals Appointed as Independent Directors

NRIs may also play the role of independent directors or advisory board members in Indian companies. These professionals also need to file DIR-3 KYC once every three years to remain compliant with Indian corporate regulations. 

What are the Documents Required for NRI DIR-3 KYC?

For verifying their identity, NRI directors usually need to submit some additional documents due to their international residency status. Some commonly required documents include the following:

• PAN card (mandatory if allotted in India)
• Address proof of overseas residence 
• A copy of a passport as proof of identity
• Valid email address and mobile number
• Digital Signature Certificate (DSC) for filing. 

In certain situations, you may need to get the documents notarized or apostilled based on the regulatory requirements. Delays in processing the filing can be avoided by making sure that all the documents are valid and up to date. 

What is the Importance of DIR-3 KYC for Corporate Governance?

Strong corporate governance practices require identifying individuals accurately who are responsible for managing the company. The DIR-3 KYC supports this objective by ensuring that the information of company directors remains updated and verified in government records. For businesses, these compliance requirements offer several benefits:

• It strengthens regulatory trust
• Ensures smooth corporate filings
• Lowers the risk of misusing identity
• Enhances transparency and accountability

Maintaining an active DIN for NRI directors via DIR-3 KYC also improves credibility in cross-border business operations. Investors, regulators, and financial institutions are usually attracted more to companies that follow proper compliance practices. 

To Conclude

Filing DIR-3 KYC is important for directors to ensure their DIN remains active and compliant with the Ministry of Corporate Affairs (MCA) requirements. Ensure to follow the right procedure and avoid making mistakes to prevent penalties or deactivation of your DIN. Moreover, if you are an NRI serving as a director in an Indian company, you must understand the additional requirements to ensure compliance. To ensure adherence with the regulations, connect with an expert at Savetaxs. 

At Savetaxs, our team of experts can offer expert assistance to ensure accurate and timely filing of the DIR-3 KYC form. You can avoid the hefty penalty of Rs. 5,000 or the deactivation of DIN by staying compliant with the MCA regulations with our expert guidance. From document preparation, attestation, to final submission, you can get assistance with everything in one place. Contact us today and keep your DIN active.