Introduction

The Ministry of Corporate Affairs (MCA) has notified Companies ((Appointment and Qualification of Directors) of the Fourth Amendment Rules, 2018. These Rules shall come into effect from 10th July, 2018. The Two major amendments that are done -

• All the directors who are allotted with DIN on or before 31st March 2018,  have to file DIR 3 KYC in order to keep their allotted DIN as “active”, if not filled then MCA will mark all approved DINs as ‘Deactivated’ with reasons as ‘Non-filing of DIR-3 KYC’

The companies incorporated on or before 31st December 2017, were required to verify their registered office by filling a form named ACTIVE (Active Company Tagging Identities and Verification) on or before 15.06.2019. If not filled then MCA will mark all the companies as “ACTIVE-non-compliant” with reasons as ‘non-filing of the ACTIVE form

Now, the timelines for both filings lapse, if a director has to file the ACTIVE e-from or DIR 3 KYC then have to give a penalty of INR 10,000 and 5000 respectively.

MCA has come with a sound of relief in the penalties with the latest update –

Latest Announcement DIR 3 KYC 

DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web and those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification(ACTIVE) form are encouraged to become compliant once again in pursuance of the General Circular No. 11 dated 24th March, 2020 & General Circular No.12 dated 30th March 2020 and file DIR-3KYC/DIR-3KYC-Web/ACTIVE as the case may be between 1st April, 2020 to 30th September 2020 without any filing fee of INR 5000/INR 10000 respectively

In order to remove the tag of Active-non-compliant status, then company has to file for an ACTIVE e-form, with a penalty of Rs. 10,000. And in order to remove the tag of De-activated DIN, director has to file DIR-3 KYC form with a penalty of Rs. 5000.

Also, if any director’s DIN is deactivated they are not eligible for filing of any company compliance. Therefore, it becomes necessary for a director to change their DIN status from de-active to active by filing of DIR-3 KYC.

With circular No. 11 dated 24th March, 2020, MCA has provided the company and their directors with another chance for filing of DIR 3 KYC and ACTIVE (Active Company Tagging Identities and Verification) without any penalty.

As per this notification, if the filling will be done on or before 30th September 2020 there will be no penalty 

What is the Director Identification Number (DIN)

• DIN is a unique identification number given to the applicant who wants to be a director or an existing director of a company.
• It can be obtained by an application in eForm DIR-3. This is one time process and is allotted only once in a lifetime. In case a person wants to be director in more than one company, the same DIN can be used in multiple companies.
• However, now with the new updates all directors with a DIN will have to submit their KYC details annually in eForm DIR-3 KYC.

Effect of Non-Filing of DIR 3 KYC on Director:

Following are the impacts on Directors if their DIN are in de-active status as per MCA records:

• The person can’t be appointed as a director in any new Company or LLP.
• He is not permitted to resign from any Company or LLP from the existing company.
• He has no right to mention his DIN on any document in related to Company
• Can’t use his DSCs in any filing including MCA compliance.

Effect of Non-Filing of DIR 3 KYC on Company:

Following are the impacts on the company, if directors' DIN are in de-active status as per MCA records:

• The company is liable to file any annual compliance form like AOC-4 and MGT-7 with ROC.
• The company can’t file any form with DSC of a director whose DIN has been deactivated.
• The company is not allowed to get any document signed from such Director whose DIN is de-active
• The company is not allowed to mention the DIN no. of such Director whose DIN is de-active

What is Active Company Tagging Identities and Verification(ACTIVE)?

ACTIVE (Active Company Tagging Identities and Verification) is a new compliance update from MCA. The filing of this is mandatory for all the companies which are incorporated on or before 31st December 2017.

All the organisations (whether private limited, public limited, OPC, or LLP) registered on or before 31st December 2017 were required to file this form before 25th April 2019. This timeline is now lapsed.

Non-Filing e-Form ACTIVE

Ifa the company has failed to fileACTIVE form (named INC-22A) on or before the said date, the status of such company has been marked as ‘ACTIVE Non-compliant’.  

Also, the Director Identification Number (DIN) of all the Directors of any such ‘ACTIVE non-compliant’ companies, are marked as ‘Director of ACTIVE non-compliant company’ 

Effects of Non-Filing e-Form ACTIVE

• The Company will be marked as “ACTIVE-non-compliant.
• A penalty of INR 10,000 will be levied for late filing of ACTIVE (INC-22A).
• No request will be accepted by ROC for amending any event-based information or changes. This can include -

1. SH-07 (Change in Authorized Capital);
2. PAS-03 (Change in Paid-up Capital);
3. DIR-12 (Changes in Director except cessation);
4. INC-22 (Change in Registered Office);
5. INC-28 (Amalgamation, de-merger)

• The ROC may conclude that the company is not carrying on any business or operations
• A physical verification can be done by the ROC at the registered office of the company if required.
• The Registrar has a right to initiate action for the removal of the name of the company from the register of companies

Conclusion –

It’s a mandate for all the companies to fulfil the MCA compliances on time. This filing also includes the latest amended compliances. Any failure in this may result in heavy penalties and further disqualification of directors even the companies. It’s always better to take an expert advice to avoid such penalties.