change of address of Directors - DIR-6

MCA requires that any change in the particulars in the Director Identification Number (DIN) has to be filed via another form i.e. DIR-6.

Now here if the Director changes his address then he has to attach a plethora of documents from the latest copy of his electricity bill or telephone bill or mobile bill or bank statement. In a recent case we had attached a copy of his bank statement since the particular Director did not have the other specified documents. MCA came back with a query stating that the bank statement is not the latest. Now come on, how can the Director share his latest bank statement particulars showing how much money he has in the bank a/c as on a latest date. Has MCA gone out of its mind. This is nothing but paranoia going to the extreme. What is the guarantee that the bank statement is the latest is the proof that the Director is very much alive and kicking in India. Normally no Director goes personally to update his bank a/c pass book. He sends his messenger to do this menial job. Frankly it beats all rational logic. Sometimes, nay most of the times the govt. working is lunatic to say the least. 

Directors with two DINs

Those Directors who have taken more than one DIN either knowingly or in advertently are in for a huge setback. The KYC is going through for one DIN, but huge problem if you try to do KYC for the second DIN. As per MCA rules, if you have two DIN, then you have to surrender the latter one, for which a form DIR-5 has to be filed. Now if you try to file DIR-5 without doing the KYC, then system is not accepting stating that the DINs have been de-activated. If you somehow do the KYC of one DIN, then doing the KYC for the second DIN becomes a huge problem. The passport no. & aadhar no. is linked to the first DIN, so the system is rejecting if we mention these details. We cannot say that the incumbent does not have a passport or an aadhar because that is tantamount to making a wrong statement. It is a total quandary. MCA has tied itself in knots because of this issue. It is not user friendly or business friendly at all. People make mistakes, even business persons make mistakes at times, but there should be an amicable solution to all the human errors. Compliance is being sought to be done by surrendering the latter DIN, but the system is so rigid that it has become impossible to comply. 

LLP registration

MCA has vide its notification dated 18th September, 2018 streamlined the process of incorporation of Limited Liability Partnerships (LLP) in India. Hitherto, for more than 10 months, the LLP incorporation had come to a standstill as MCA had stopped issuing stand-alone Director Identification Number (DIN) to individuals.

1) Now name reservation for a LLP can be done by a web service called LLP-RUN. Unfortunate part is that this RUN will be governed by their Central Reservation Centre (CRC) which is a retrograde step, in my view. That section is manned by totally incompetent people who have no idea at all about business incorporation.

2) Form 2 for incorporation of LLP will be replaced by FiLLiP which will carry the DIN allotment process also. So this is good move.

3) Similarly minor amendments have been made to Addendum to Form 2 (which will be known as Addendum to Form FiLLiP, form 5 (notice for change of name), form 17 (conversion of general partnership firm into LLP) and form 18 (conversion of a private company/ unlisted public company into LLP) consequent to the above amendments. It would be interesting to note form 18 amendments as with the proposed mandatory demat of securities of unlisted public limited companies from 2nd October onwards, many unlisted public companies will seek to convert themselves into LLPs / private companies to avoid that compliance. They might seek to convert themselves into private companies but there is always a lurking fear the mandatory demat of securities could be extended to private companies as well, in the future.

All these changes will take effect from 2nd October, 2018.  

annual KYC by all Directors

MCA has vide its notification dated 5th July, 2018 amended the Companies (Appointment and Qualification of Directors) Rules, 2014 wherein it has added a Rule 11(2) which gives powers to the Central Government or Regional Director (Northern region) to deactivate the DIN of any individual who does not file the newly created form DIR-3-KYC within the stipulated time.

The de-activated DIN can be activated only after the form DIR-3-KYC is filed along with the requisite fee as prescribed.

A Rule 12A has been added which provides that every individual who has been allotted a DIN as on 31st March of a financial year shall submit form DIR-3-KYC within 30th April of the immediate next financial year.

In the interim for the first year, all those individuals who are allotted a DIN shall file DIR-3-KYC within 31st August, 2018

The form DIR-3-KYC is given in the amendment, but not released yet. On a cursory glance at the form, it requires personal mobile no. and personal e-mail id of the Director to be indicated. The documents required are proof of identity and proof of residence. Not sure whether any specific proof is required for the mobile no. or e-mail id. That will be know only when the form is released and we go through the help file of the form.

This amendment has been made effective from 10th July, 2018 so the form DIR-3-KYC will also be released on that date at the MCA portal. 

new DIR-3 form

MCA has vide its notification dated 12th June, 2018 released the new DIN form in DIR-3. The new DIN form now allows DIN to be obtained for a designated partner in an existing LLP. But it still does not solve the problem of two completely fresh entrepreneurs coming together to form a LLP. That is because the existing new LLP name reservation form and LLP incorporation form i.e. form 1 LLP and form 2 LLP still asks for DIN of the proposed director.

So there is an anomaly still persisting. Hope MCA looks into it because LLP is the preferred form for doing business these days. LLP incorporation has been stuck for so many months. This is not ease of doing business by the MCA. 

DIN for a Director in an existing company

MCA has vide its notification dated 26th January, 2018 eased the requirement of a DIN (Director Identification Number) for appointment of a Director in an existing company. They have amended the Companies (Appointment & Qualification of Directors) Rules, 2014 to that extent.

Rule 9(1) has been amended as follows:

" (1) Every applicant, who intends to be appointed as director of an existing company shall make an application electronically in Form DIR-3, to the central Government for allotment of a Director Identification Number (DIN) along with such fees as provided under the companies (Registration offices and Fees) Rules, 2014.

Provided that in case of proposed directors not having approved DIN, the particulars of maximum three directors shall be mentioned in Form No.INC-32 (SPICe) and DIN may be allotted to maximum three proposed directors through Form INC-32 (SPICe)";

What this means is that if a person is proposed to be appointed as a Director of an existing company (as against a company to be incorporated), then he need not mandatorily have a DIN, which was a pre-existing condition. In that case, the company has to file form INC-32 (SPICe) and this form INC-32 (SPICe) can take maximum 3 DIN applications. The additional document to be attached to the form INC-32 (SPICe) is the board resolution approving the appointment of these new directors.

Now this form INC-32(SPICe) is an incorporation form, so why confuse it with the DIN forms, it is not clear at all. Why not enable form DIR-3 itself to take upto 3 applications and allow it to be uploaded that way with the board resolution attached. Perhaps they could have formed a DIR-3 (company) form as against a DIR-3 (individual) form. Confusion worse confounded.

Then again we come to Rule 9(3) which is pertaining to form DIR-3. The main sub rule 9(3)(a) has been left as it is i.e.

"The applicant shall download Form DIR-3 from the portal, fill in the required particulars sought ¹[therein, verify and sign the form] and after attaching copies of the following documents, scan and file the entire set of documents electronically-"

The heading of Rule 9 has been changed to 

"Application for allotment of Director rdentificataon Number before appointment in an existing company,,;"

Earlier it was 

"Application for Allotment of Director Identification Number"

Now under this revised heading of Rule 9, there are two forms prescribed i.e. INC-32 (SPICe) and form DIR-3 without clearly specifying when both of these forms are to be used. 

It is not clear now how many forms are to be used. DIR-3 by the Director, INC 32(SPICe) by the company and thereafter another form DIR-12 for appointment of Directors. 

MCA is clearly losing its way, it is a badly drafted amendment with the left hand not knowing what the right hand is doing.