Director KYC :Hitting reset on regulations
The MCA has embarked upon a process of re-validation of documents submitted by directors by conducting a re-KYC exercise. The supposed aim of this exercise is to associate director DINs with their personal email address and unique phone numbers. Whereas earlier an email address and phone number could have been associated with multiple directors this shall no longer be the case.
To accomplish this the MCA will mark all directors the DINs of all directors who do not complete this process by the 31st of August as deactivated thereby causing such directors to not be able to hold director seats anymore.
What’s more, this process of re-KYC has been made mandatory for even directors who have already been disqualified.
The rationale for such a move is hard to understand this process could lead to removal of fake director profiles. However this is not a given as the process of obtaining digital signatures, which is a necessity to apply for a DIN already requires unique phone numbers and email addresses.
On the other hand, There are many directors who obtained a DIN ages ago and no longer have digital signatures since they are not signatories to tax or MCA compliance’s. These directors would now have to re-submit copious documentation to renew their digital signatures and then file their DIR-3 to complete the KYC process. This becomes particularly onerous for foreign directors who have to get their documents notarized/apostatized. Although a separate process for foreign directors has been stipulated.
The wisdom of having all directors resubmit their KYC documents at such a short notice is extremely questionable. Policy makers within the bureaucracy have to realise that businesses and stakeholders also have other important things to do, such as running their businesses, and cannot be made to comply with whatever new compliance our babus keep dreaming up. Doing business in India cannot become easier as long as we keep increasing the number of hoops a business has to jump through. Policy makers have said that these measures were taken to prevent frauds in light of the recent Nirav Modi brouhaha. if only this were to be the magic pill.
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