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KYC norms: Directors protest disqualification, seek time to finish process

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Company directors who have not authenticated themselves have written to the secretary to the Ministry of Corporate Affairs (MCA), seeking more time to complete the process. They said the MCA 21 site was not working and because of that they could not complete their know your customer (KYC) norms. The MCA is deactivating the registrations of 2 million directors because they did not update their KYCs. In 60 days, 1.2 million directors have completed their KYCs. The remaining will be disqualified unless they update their KYC and pay a penalty to the ministry.
There were 3.2 million active director identification numbers (DINs) with the Registrar of Companies. The ministry is planning to track down each director who has not completed his or her KYC. Stating that the ministry will not extend the time to update KYC, sources said it was the directors’ fault and not the ministry’s. “If they have not done it, they deserve to pay a fine,” an official said, adding the system had the capacity to handle 100,000 companies each day. “On the last day, more than 100,000 directors had done their update. This means that the systems can take the load. In 60 days, 6 million directors could have completed the process. The fact that they didn’t shows how much they lack discipline.” 
Directors have said disqualification will cause damage to the economy. Disqualified directors are not allowed to practise for five years, according to the Companies Act. A senior ministry official said: “Of the 60 days we gave them, 15 days was an extension. It was initially opened for 45 days.” In a 60-day drive, the MCA asked directors to update their KYCs by linking them to their Aadhaar number and passport details. In June, the government had asked company directors, including those who were disqualified, and designated partners in LLPs (limited liability partnerships) to submit KYC details by submitting the DIR-3 KYC e-form. The last date for complying with the new norms by way of submitting form 'DIR-3 KYC' without fee was September 15. The government is cracking down on shell firms and their directors also. When the government first struck off 200,000 shell companies, 300,000 directors were disqualified.
 
The Business Standard, 18th September 2018

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