You can’t be a Company director without mobile phone, email ID and DSC, under the new KYC norms
If you ever thought your life would be much easier and more peaceful without a mobile phone on you, and without an email to stay connected, well, you could be right, but you cannot function as a director in companies. This is the fallout of the new DIR-3-KYC norms brought forth by the Ministry of Corporate Affairs (MCA). The Rules require every director to file the KYC form by 31 August 2018, after which the Directors’ Identification Number (DIN) granted to the director shall be “deactivated”. The rules also lay down that such de-activated DIN shall be re-activated only after the person has filed the KYC form.
 
One of the mandatory requisites of the new KYC form is that the director shall provide his/ her mobile number, email ID and file the e-form with his/her own digital signature (Differential Scanning Calorimetry or DSC).  If you thought you may provide the mobile number and email ID of your children, or your assistants, you are mistaken, because the form goes on to say that the mobile number and the email ID shall be of the director himself.
 
Section 153 of the Companies Act makes it mandatory for any prospective director to apply for DIN. While there is nothing in the statute to say that on de-activation of the DIN, the director will lose his office as such, technically called vacation of office. It will not be surprising if the government, in its recent impetus to weed out shell companies and dummy directors, charges ahead and challenges the very directorship of such directors whose DINs stand deactivated.
 
The result – you cannot be a director, unless you have a mobile number and an email ID. Legal experts may argue that being director in companies implies the basic freedom to carry out business, as the right to carry out business includes the right to carry it in corporate form as well, and there is nothing in the law of the land to make a mobile number or an email compulsory. Therefore, if there is a law that forces a corporate professional to have a personal mobile number and email ID, the law needs to be questioned.
 
Not having a personal mobile phone does not necessarily indicate backwardness. Several people use a limited insulation from communications technology as a way of life. There is no basis to contend that such persons are not fit to be corporate directors.
 
It may be argued that the qualifications of a director and the circumstances in which a director automatically vacates his office are all well defined in the law. De-activation of the DIN is not one of such circumstances. It may also be argued that there is an assurance in the MCA DIN rules that the DIN once granted has lifetime validity, and the question of its de-activation does not arise at all.
 
In order to file this e-form, all directors (Indian and foreign national) will have to obtain or have their own email ID and mobile number and will need to mention the one-time passcode (OTP) in the e-form and sign with their own DSC. 
 
The consequence of false or incomplete declaration is that the director shall be liable to be penalised under section 448 of the Act and under the relevant provisions of the Indian Penal Code, 1860 and any other law as applicable.
 
The government’s resolve to weed out shell companies and dummy directors results from the apprehension that 10-lakh odd companies have several directors who are of no consequence to the company, even though the requirement for DIN was introduced sometime in 2006.
 
(Vinod Kothari is a chartered accountant, trainer and author. Mr Kothari, through his firm, Vinod Kothari and Company, is also engaged in the practice of corporate law for over 25 years.)
 
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