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Rediff.com  » Business » Angry directors mull legal action as Aadhaar is made mandatory

Angry directors mull legal action as Aadhaar is made mandatory

Last updated on: August 08, 2018 23:09 IST

The MCA notification lays down a deadline of August 31 for the fulfillment of the KYC requirements

Illustration: Uttam Ghosh/Rediff.com

Company directors now need to provide their Aadhaar numbers to the government, according to a July 5 gazette notification by the Ministry of Corporate Affairs, which makes it mandatory for all directors to go through the new KYC process, including Aadhaar details.

 

This has angered a set of directors, particularly those without the identity document, who are assessing their legal options to challenge the ministry for contempt of the Supreme Court.

Last week, directors of a handful of startups even met in Bengaluru and sought legal advice on the situation from lawyers who fought the Aadhaar constitutionality case in the SC, sources said.

The lawyers advised the directors to get a formal response from the ministry or the government stating that Aadhaar is mandatory, which can be used as evidence in the petition that four separate groups are planning to file in the high courts of Maharashtra, Delhi, Karnataka and Tamil Nadu, said a source, who was present in the meeting.

The KYC procedure for directors is a yearly affair, which, if left incomplete, leads to invalidation of the director information number without which a person can’t officially run the company or act on its behalf.

This has worried directors who are reaching out to others who don’t possess Aadhaar or don’t want to share it via WhatsApp groups.

One such group has at least a dozen willing participants willing to be petitioners in their respective high courts.

One such director of an internet services company told Business Standard that he’s willing to contribute with time and money when the petition is filed in the court.

“I am not comfortable getting an Aadhaar, so I can’t be expected to share it before the Supreme Court has decided on it.

"I am willing to be a petitioner as the company can go to default if official documents are not filed in time,” he said.

The MCA notification lays down a deadline of August 31 for the fulfillment of the KYC requirements and says that the Director Information Number can be deactivated if the form is not submitted on time.

“The central government or regional director (Northern Region), or any officer authorised by the central government or regional director (northern region) shall deactivate the Director Identification Number (DIN), of an individual who does not intimate his particulars in e-form DIR-3-KYC within stipulated time in accordance with Rule 12A,” the notification states.

“The de-activated DIN shall be re-activated only after e-form DIR-3-KYC is filed along with fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014,” it added.

At this juncture, the form notified in the gazette is quiet on the mandatory nature of Aadhaar even as it asks for the number to be filled in one of the fields and requires a scanned copy of the document to be uploaded in the next page.

When directors tried to file the documents without Aadhaar, the form wasn’t expected, at least five people told Business Standard.

The FAQ posted on the MCA website, however, clarifies, “If the director is a citizen of India, then he should mandatorily enter his Aadhaar number in the form.

Suitable message urging the stakeholders to obtain Aadhaar as early as possible for integrating their details with MCA21 was already posted on the MCA21 portal,” it states.

This prompted Samir Kelekar, director of Teknotrends Software Pvt Ltd, to write to the Registrar of Companies in the state seeking relief from providing the Aadhaar details citing the pending SC judgement. Kelekar said he hasn’t received a response yet.

Business Standard reviewed this and other correspondence sent by the industry seeking relief to the ministry and the registrar of companies.

Meanwhile, Kiran Jonnalagadda, co-founder of HasGeek - a startup in Bengaluru - said that the industry just wants relief and it’s considering all options - legal and otherwise.

“The gazette notification does not appear to make Aadhaar mandatory, but the form requires it. We have approached the MCA for a clarification, as the Supreme Court has not approved mandatory Aadhaar.

"We are waiting for their response, and considering an appeal to courts for the SC order to be upheld,” Jonnalagadda told Business Standard.

Mayank Jain in New Delhi
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