Government proposes New Rule to make Aadhaar compulsory for Corporate Filings

The government is planning to introduce a mandate for Aadhaar biometric verification for certain individuals, such as designated directors and professionals like company secretaries who are involved in filing statutory documents.

This measure aims to enhance the security of statutory filings and promote accountability.

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The new requirement will apply to those who are registered as ‘business users’ on the MCA21 website and are authorized to file documents on behalf of companies.

A source familiar with the plan, who requested anonymity, stated that the change is expected to be implemented following the completion of the website’s ongoing upgrade later this year.

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The current upgrade of the Ministry’s statutory filing system aims to improve authentication requirements for filers by using two methods.

The first is to re-engineer the IT system from scratch while retaining the old filing system, and the second is to gradually introduce new web-based statutory filing forms that allow real-time verification of information already available with the Ministry.

This is done when an authorized filer inputs data on a new form before submission.

Individuals who wish to be recognized as ‘business users’ must undergo mandatory Know Your Customer (KYC) verification,

which can be done based on a unique digital signature, Permanent Account Number (PAN) issued by the income tax department, or Director Identification Numbers (DINs) issued by the Ministry.

Alternatively, identification numbers from professional institutes such as the Institute of Chartered Accountants of India, phone numbers, and emails can also be used for this purpose.

Most of the over 60 web-based forms introduced in the third version of the filing portal are now subject to heightened security requirements.

In the coming months, the ministry plans to roll out approximately 50 additional forms to complete the transition to the new corporate statutory filing system.

Upon completing a seamless transition, the ministry intends to add Aadhaar-based biometric verification to the existing list of identification requirements.

The addition of this new requirement is expected to boost efforts to combat financial irregularities and money laundering associated with shell companies, as per an anonymous source cited above.

Initially, when the ministry introduced 56 new web-based forms for various company filings on 23 January, only about 30,000 company directors were registered as business users with unique identities.

As of now, this number, which also includes key managerial personnel of companies, has surpassed 600,000, according to another anonymous source.

Since only individuals with unique identities in the system are permitted to file forms, it becomes easier for authorities to ensure accountability in corporate disclosures.

However, becoming a business user of the portal is not required when reserving names for a new company, which happens prior to the entity’s incorporation.

Despite this, the number of form filings has significantly increased, indicating that the new filing system has become more stable.

The MCA21 system upgrade is a mission-mode e-governance project of the government.

At the time of publication, the Ministry of Corporate Affairs had not responded to an email seeking comments on the matter.

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