Legal Provisions related to DIN including Surrender of DIN By FCS Shweta Gupta

In this article, we will discuss DIN, its associated concepts and facets.

What is DIN?

DIN stands for Director Identification Number. It is an eight-digit unique number allotted by the Ministry of Corporate affairs, Central Government of India to a person who wishes to become a director in the company. DIN is person specific i.e. unique for a particular person.

DIN provides distinguished identity to the director as no one or more director(s) shall possess the same DIN. Also through the DIN, details related to directors can be fetched. Therefore, for becoming director DIN is mandatory and an essential prerequisite.

Why DIN?

DIN, as stated above, is an essential requirement for every director. Just as professionals have their unique identification numbers similarly directors are assigned a unique number to provide them a unique and distinct identity. DIN is an essential prerequisite for becoming a director. Read the Article here on MUDS Website. The requirement for having DIN is as follows:

  • DIN is the primary requisite for becoming a director in any company.
  • DIN as such provides a separate unique identity to each director.
  • Through DIN the following details related to directors can be adopted from the DIN No:
Name of the Director
List of companies in which he is director
Status of Din can be obtained
DIN PAN status can be verified
Current designation of director can be obtained
Date of appointment at current designation
Original date of appointment
Date of cessation from the directorship
Current status of the company in which he is a director

  • Directors are required to quote DIN in all the communications and correspondences made by them on behalf of the company.

Legal Provisions related to DIN

The chapter XI of The Companies Act, 2013 contains provisions related to “Appointment and Qualification of Directors.” The relevant sections which are essential to be taken into account while being appointed as a director are as follows:

  • Section 153: Application for Allotment of DIN

This section states that every individual who intents or wishes to be a director shall have to necessarily obtain DIN from the central Government prior to becoming a director. The implication to be drawn from this section is that for becoming a director an individual should have DIN allotted to him by Central Government prior to becoming a director. The process for obtaining DIN shall be discussed at a later stage in this article. However vide an amendment made under The Companies Amendment Act, 2017 the Central Government has been assigned power to identify any other identification number to be used or considered as DIN.

  • Section 154: Allotment of DIN

This section specifies the time limit within which the Central Government shall allot the DIN to the concerned applicant on receiving an application from him for allotment of DIN. The section specifies that the central Government shall allot DIN to the concerned applicant within One month from the receipt of application from the concerned applicant.

  • Section 155: Prohibition to obtain more than one DIN

This section levies a prohibition on directors from obtaining multiple DIN’S. If an individual is a director in multiple companies then the concerned individual is not required to obtain separate DIN for each company but single DIN obtained would be sufficient for becoming a director. That single DIN can be quoted for all companies where is or intends to be a director. If an individual obtains multiple DIN’S then in such a situation he would have to retain the oldest DIN obtained and surrender back all other DIN’S in his possession whether they were associated or not with any company, used or not. The companies associated with the surrendered DIN’S would be mapped to the oldest i.e. Retained DIN.

  • Section 156: Director to Intimate to the concerned Company

This section requires every individual who wishes / intents to become a director and who has applied to Central Government for obtaining DIN shall after obtaining DIN from Central Government, shall intimate the allotted DIN to the company or companies in which he is or proposes to be a director, within one month of obtaining such DIN.

  • Section 157: Company to intimate DIN to Registrar

This section imposes a responsibility on the company to intimate the DIN of Concerned individuals who have been appointed as directors to the concerned Registrar of Companies or any other relevant authority within Fifteen days from receiving intimation from the concerned individual who is allotted DIN from Central Government.

  • Section 158: Obligation to indicate DIN

This section requires that any company or director while making any communication or correspondences in relation to directors to any other company, regulatory authorities are mandatorily required to quote the DIN of the directors, wherever necessarily required to do so.

  • Section 159: Punishment for contravention

In cases where any individual or directors contravenes the provisions of the above-mentioned Section 152, section 155 and section 156, then the concerned individual or director as the case may be shall be liable to the below-mentioned punishment :

  1. Imprisonment: For a term which may extend to six months; or
  2. Fine: which may extend upto Fifty thousand rupees.

Where the offenses under this section is a continuing one, then further fine which may extend upto five hundred rupees for every day during which such default continues shall be levied.

Therefore for obtaining DIN, the concerned individual shall be required to comply with the provisions of the above-mentioned sections. Ignorance of any section shall deviate the concerned individual from obtaining DIN and be liable to a penalty as prescribed in the above sections.

How to obtain DIN?

Having discussed what is DIN, why DIN is required, the legal provisions related to DIN; Now it becomes essential to understand how DIN is to be obtained. This is what the concerned individual who wishes or intends to be a director will have to pass through or follow to obtain DIN for ultimately becoming a director.

There are two routes for obtaining DIN. An individual can as per his situation obtain DIN through either of the two routes.

  • INC 32

In order to facilitate the Ease of Doing Business and to help speedy incorporation of companies, the Ministry of Corporate Affairs(MCA) introduced the Simplified Procedure for Incorporation of Companies (SPICE) vide which a new company can be incorporated within 48 hours of submission of application. Through INC 32 name can be obtained for the proposed company along with DIN for first directors i.e. for 2 directors in case the proposed company is a private company and for 3 directors in case the proposed company is a public company. DIN through this route can be obtained only by fresh companies to be incorporated and not by existing companies. This is a time-saving initiative as company name availability and DIN application are incorporated in one single e-form i.e. INC 32. Prior to SPICE two separate forms were required for this one for name availability and one for obtaining DIN. But after SPICE only one single form is sufficient. Hence this is an easier and better route for companies which are going to be incorporated as a name for proposed company and DIN for the intending directors will be obtained simultaneously.

  • DIR 3

 Application for obtaining DIN for becoming a director in an existing company is required to be made vide DIR 3. Any person who intends to become a director in an existing company and does not possess DIN shall be required to obtain DIN by filing this e – form. This route is available for obtaining DIN for becoming a director in an existing company. This form provides a uniform route to all individuals intending to become a director to obtain DIN.

What to do in case of multiple DINs?

There may arise a real-life situation wherein an individual may be in possession of multiple DIN’S. In such a situation, the concerned DIN holder will have to surrender all the DIN’S allotted in his name except one. He shall be allowed to retain the oldest DIN whether used or not. The companies associated with multiple DIN’S shall be mapped or transferred to the retained DIN.

The only way out in such a situation, it occurs would be to surrender all the multiple DIN’S allotted by filing e –form DIR 5 attaching therewith an affidavit.

Surrender of DIN

A director holding DIN may be required to surrender DIN allotted either on order of Central Government or Voluntarily.

1. On order of Central Government:

The Central Government may by order require any director in possession of DIN to compulsorily surrender DIN. The cases under which the central government may pass an order for surrender of DIN are as follows:

  • If duplicate DIN has been issued to the director ;
  • The allotted DIN was obtained By fraudulent means ;
  • On the death of the concerned DIN holder ;
  • In the case where the DIN holder has been declared as a person of unsound mind by the Court and
  • In the case where the DIN holder has been adjudicated insolvent by the Court.

2. Voluntarily by DIN Holder:

The DIN holder may voluntarily surrender his DIN suo motto. In such a situation he would be required to file e form DIR 5 attaching with it a declaration that he though in possession of DIN has never been appointed as a director in any company and that the DIN which is being surrendered has never been used in making any communication to any regulatory authority. On verification by Central Government, the said DIN shall be deactivated.

I hope that this article was informative and helpful in portraying as to what DIN is. Stay connected with MUDS for more updates on this topic.

Click here to read the disclaimer

Write a Comment