Corporate affairs ministry to collect KYC details of companies, CAs

It is an effort to weed out unscrupulous elements.

In a bid to weed out unscrupulous elements, the Corporate Affairs Ministry has planned to collect KYC details of companies, chartered accountants, cost accountants and company secretaries. 
 
According to a report in ET, a senior ministry official said the exercise aimed at developing a "sanitised list" of companies and professionals. 
 
In 2018, the ministry had carried out a Know Your Customer (KYC) initiative for directors to establish their identities. It was part of larger effort to clamp down on entities suspected to be conduits for illicit fund flows. 
 
ET quoted Corporate Affairs Secretary Injeti Srinivas as saying that that KYC requirement for directors was a major step. 
 
Notably, of the 33 lakh individuals who had Director Identification Numbers (DINs), little over 16 lakh complied with the KYC requirement. It may be mentioned here that DIN is a unique number allotted to those individuals who are eligible to have directorship on the boards of registered companies. 
 
The ministry would be undertaking the KYC process for companies, said Srinivas. This would be a major step wherein the MCA21 system would not register the companies in case they are non-compliant with certain parameters. 
 
"If you are defaulting in payment of deposits, system will not let you register. If you are having non-compliant directors who have not done KYC, the system will not let you enter. 
 
So the company will be forced to either remove the director or make the director compliant and then get into the system," Srinivas told PTI. 
 
He added that such companies would however be allowed to transact with the ministry but would be shown as "non-compliant" in the system. 
 
The ministry would also carry out the KYC process for professionals – chartered accountants, cost accountants and company secretaries. 
 
The secretary said that professionals will be screened first and then registered into the system," the secretary said. 
 
Srinivas said that prima-facie there is nothing lacking in the Companies Act itself but on many occasions, compliance appears to be more of a formality. 
 
“If compliance is more like tick box and all, then you are not really having a strong foundation of corporate governance... Many of the big sort of incidents that we have come across in the last year or two, these things are becoming very apparent," he noted. 
 
Source: Media reports

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