Corporate Law Update No. 1

Relaxation in KYC requirements for directors of Indian companies

The Ministry of Corporate Affairs has recently notified the Companies (Appointment and Qualifications of Directors), Amendment Rules, 2025 on 31 December 2025 (‘2025 Amendment’). The 2025 Amendment will be effective from 31 March 2026 and seeks to simplify and rationalise the compliance framework applicable to directors, particularly in relation to Know Your Customer (‘KYC’) requirements. 

Pursuant to this 2025 Amendment, the Rule 11 and Rule 12A of the Companies (Appointment and Qualifications of Directors) Rules, 2014 have been amended to streamline the KYC filing mechanism for directors of Indian companies. Under the revised framework, directors are no longer required to submit KYC details on an annual basis. A simplified KYC intimation is now required once every three years, replacing the earlier annual KYC requirement. This change significantly reduces recurring compliance obligations for the directors and aligns with the ease of doing business initiative of the Government of India. 

Currently, under the Companies (Appointment and Qualifications of Directors) Rules, 2014, two separate forms are prescribed: (a) ‘e-form DIR-3-KYC’ which is used for KYC filing by new directors or in case of changes to existing details; and (b) ‘web service DIR-3 KYC WEB’ which is used for annual verification of director’s KYC details. These forms are sought to be discontinued from 31 March 2026 and replaced by a single form ‘Form No. DIR-3-KYC-Web’ pursuant to the 2025 Amendment. 

As per the 2025 Amendment, every individual who holds a Director Identification Number (‘DIN’) as of 31 March 2026 will have to make the KYC filing in ‘Form No. DIR-3-KYC-Web’ to the Central Government on or before 30 June of the immediately following every third consecutive financial year. Furthermore, the revised and simplified Form No. DIR-3 KYC-WEB may now be used not only for KYC compliance but also for: (a) updating the mobile numbers; (b) updating the email address; (c) updating the residential address; and (d) reactivation of DIN. It is further clarified that in the event of any change in mobile number, email address or residential address, the director must file the updated details in ‘Form No. DIR-3 KYC-WEB’ within a period of 30 days of such change. 

In conclusion, the 2025 Amendment is aimed at providing significant compliance relief to directors across all companies by reducing the frequency of filing, simplifying procedures and consolidating multiple compliance requirements into a single mechanism. This reform reflects the MCA’s broader intent to promote regulatory efficiency while maintaining the integrity of director-related disclosures.