The government recently came up with the move of identification of the directors of the companies through KYC and as many as 21 lakh out of 33 lakh directors of companies failed to comply with KYC norms. With this, the government has started the process of de-activating their identification numbers.
The Director Identification Numbers (DINs) is a unique number allotted to individuals who are eligible to have directorship on the boards of registered companies, and this number is going to be deactivated by the government. These will be re-activated only when the companies pay a fee of Rs 5,000 along with the requisite form and the individuals concerned might also face action.
This move by the Corporate Affairs Ministry is surely going to toughen the situation of the companies that are trying hard to cope up with the tough competition these days.
It was in June that the senior ministry official stated that out of 33 lakh active directors, only around 12.16 lakh directors completed the KYC process. The remaining of around 21 lakh individuals failed to comply with the requirement.
“The process of deactivating the non-compliant DINs is in progress and is likely to be completed by September 17, 2018,” the ministry stated.
After the deadline of September 15, 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 “de-activated”. The reason for de-activation would be ‘non-filing of DIR-3 KYC’, as per the ministry.
According to the ministry’s words, which is implementing the Companies Act, the form may be filed “in respect of such de-activated DINs only with a fee of Rs 5,000, without prejudice to any other action that may be taken”.
Talking about more details, the ministry had disqualified more than three lakh persons from holding the directorship at registered companies amid the fight against illicit fund flows the previous year. These individuals were directors at companies that were not carrying out business activities for a very long time.