A company is an artificial person capable of entering into contracts and owning property in its own name. However, the company relies on real beings to make decisions and conduct its day-to-day operations. We refer to these persons as the company’s directors. In India, any individual who wishes to become a director of a new or existing company must acquire a Director Identification Number (DIN). In this blog, we will examine different aspects of DIN, including its usage, how to obtain it, what documents are required for DIN application, and compliance requirements under the Companies Act of 2013.
What Is a Director Identification Number (DIN)?
Director Identification Number, or DIN, is an 8-digit unique identification number assigned by the Ministry of Corporate Affairs (MCA) to any individual who wishes to become a director of a new or existing business. In other words, only individuals with a valid DIN can be directors of a corporation or partners in a Limited Liability Partnership (LLP).
The following are the key elements of Director Identification Number:
An individual can only receive one DIN. DIN is person-specific, which means that a single DIN can be used to become the director of multiple companies at the same time. DIN, once earned, is valid for the individual’s lifetime. DIN assists the government in maintaining its director database. Sections 153-159 of the Companies Act, 2013 and Rules 9-12A of the Companies (Appointment and Qualification of Directors) Rules, 2014 include provisions for Director Identification Numbers.
Usage of DIN
According to Section 158 of the Companies Act of 2013, DIN must be mentioned on all returns, information, and particulars given under the act if they pertain to the director. To put it simply, if a document contains a director’s reference or requires a director’s signature, the director’s DIN should appear below their name and signature.
How To Obtain DIN
According to Section 153 of the Companies Act of 2013, every individual who wishes to be appointed as a director of a new or existing business must apply to the Central Government for a DIN number. The following are the two ways in which an individual can apply for a DIN: The SPICe Form is used to register a corporation with the MCA. It can also be used to obtain DIN numbers for the proposed company’s directors. Therefore, if an individual desires to become a director of a new company, he should apply for DIN using the SPICe form and attach the required documents: Proof of identity (Aadhaar card, PAN card, voter ID, driver’s licence, or passport) Address proof (latest bank statement/utility bills such power bill, telephone bill, etc. that are not older than two months). In such circumstances, DIN is assigned to directors following approval of the SPICe form. This form allows you to obtain a DIN for up to three directors.
DIR-3 Form.
If an individual desires to become a director of an established company, he must submit an application in e-form DIR-3 by following the procedure outlined below: Step 1: Attach the supporting documents. Attach the following documents to the e-form DIR-3 – Photograph of the applicant. Proof of identity (Aadhaar card, PAN card, voter ID, driver’s licence, or passport) Proof of residence (latest bank statement/utility bills such energy bill, telephone bill, etc., not older than two months) Step 2: Affix Digital Signature Affix the applicant’s digital signature to the form. Furthermore, the form must be digitally confirmed by the Company Secretary/Managing Director/Director/CEO/CFO of the company where the applicant is recommended to serve as a director. Step 3: Make the Fee Payment. After uploading the form, pay the filing cost. The form is only processed if the fee is paid. Step 4: Generation of DIN If the application is granted, a DIN will be generated and notified to the applicant within one month. However, if the application is defective or incomplete, MCA will notify the applicant and instruct him to correct the faults or incompleteness, as the case may be. In such a circumstance, the applicant must resubmit the application within 15 days after receiving such notification.
Common Reasons for Rejection of DIN Application
The following are some of the most typical reasons for DIN application rejection. Not submitting supporting papers Submission of documents that are invalid or expired Submit a duplicate DIN application Signature is not placed at the prescribed location. The supporting documents are not self-attested. The applicant’s photograph is not affixed The information in the application does not match the information in the supporting documents, such as the applicant’s date of birth and father’s name.
Compliance Requirements under the Companies Act, 2013
The Companies Act of 2013 and its accompanying rules stipulate the following compliance obligations for DIN holders.
Notification to Company and Registrar
According to Section 156 of the businesses Act of 2013, every director who has been assigned a DIN must notify all businesses in which he is a director in Form DIR-3B within one month of such allotment. Furthermore, Section 157 of the Act requires a business to give the DINs of all its directors to the ROC (Registrar of Companies) whenever the aforementioned notification is received from a director. Such information must be provided in Form DIR-3C within 15 days of receipt of notification from the director.
Filing of DIR 3 KYC
According to Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, any individual with a DIN as of the 31st March of a fiscal year must file an e-form DIR-3 KYC on or before the 30th of September each year. If the form is not filed by the due date, a penalty of Rs. 5000/- is charged, and the director’s DIN is deactivated until the form is properly filed with the required fees.
Notification of Change in Director’s Details
According to Rule 12 of the Companies (Appointment and Qualification of Directors) Rules, 2014, if any change occurs in the director’s details as provided in the DIN application, he must notify the MCA. The notification must be provided in Form DIR-6 within 30 days of the change. The applicant and a practising CA/CS/CMA must digitally sign the form. Additionally, include a scanned copy of the evidence of modified particulars to the form, and a practising CA/CS/CMA should attest to these attachments. If the applicant produces adequate verification of updated particulars, MCA will update the electronic database with the modifications and notify the applicant via letter, either by post or electronically.
Surrender/Cancelation/Deactivation of DIN
According to Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the Central Government or Regional Director can cancel or deactivate a director’s DIN in the following cases: If a DIN is found to be duplicate for the same person, or if it was obtained fraudulently or wrongfully, the individual must be given the opportunity to be heard. If the individual dies, is pronounced a person of unsound mind by a competent court, or is declared insolvent. If the DIN holder submits an application in Form DIR-5 for the surrender of his or her DIN, accompanied by a certification that he or she has never been appointed as a director of a company and that the DIN has never been utilised. Disqualification of the DIN Section 164(2) of the Companies Act, 2013, states that if a person is a director of a company that If a company fails to file financial statements or annual returns for 3 years or fails to repay deposits, pay interest, redeem debentures, or pay dividends for a year or more, the director cannot be reappointed or appointed to any other company for 5 years from the date of default. Simply put, the director’s DIN is invalidated.
Penalty for Noncompliance
The following fines can be imposed for noncompliance. Failure to notify the company about the DIN/holding of more than one DIN If a person has more than one DIN or fails to notify the business in which he is a director, he will be subject to a penalty of up to Rs. 50,000, with an additional penalty of Rs. 500 per day.
Failure to report DIN to the Registrar
If a company receives an intimation from its director regarding his DIN and fails to notify the Registrar within 15 days of receipt of such intimation, the company and its officers (who are in default) will be subject to a Rs. 25,000 penalty and an additional penalty of Rs. 100 per day, which may be increased to Rs. 1 lakh.
