In this article, Chandana Lakshman, a third-year law student of Tamilnadu Dr.Ambedkar law University, (School of excellence in law), Chennai and pursuing Diploma in Companies Act, Corporate Governance and SEBI Regulations from LawSikho, discusses how to apply for a DIN.

Introduction

In olden days the money which was invested by the hard-earned investors in the company were not made secured as a director either had mala-fide intentions or they would misuse the money which was invested by the investors. To prevent such issues and to give assurance to the investor, Director Identification Number came into existence. By use of DIN, the entire database of the director becomes available. Director Identification Number was introduced for the first time in Companies(Amendment) Act 2006 inserted in Section 266A to 266G. By this, it becomes mandatory for all the qualified directors to obtain DIN within the prescribed period.

Understanding the term DIN

Director Identification Number is a unique number which is given to existing directors of Incorporated Companies.

Rule 2(d) of Companies (Appointment and Qualification of directors)Rule 2014 defines Director Identification Number as an identification number which is allotted by the Central Government to any individual, intending to be appointed as Director or to any existing director of a company for the purposes of identifying as a director of a company.

The purpose behind using DIN

The following points are the purpose of using DIN

• It’s a unique identification number.
• The entire database of the director can be found using DIN
• The name of the director, address and PAN number can be found.
• The past companies in which he had worked and present company in which he is working can be found.
• Once obtained DIN number, the director can use the same for life irrespective of the company he works in. A change in the company doesn’t change the Director Identification Number.

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Procedure to obtain DIN

There are three different forms:

Spice Form (Application Of First Directors In Case Of New Companies)

SPICe form is used by the first directors of new companies.

The intended person who has not obtained DIN shall make an application through eForm SPICe.

The documents which  need to be attached are

•   Proof of identity
•   Proof of Address.

Only after the approval of the form, DIN would be allocated.

DIR-3 Form (Application Of Directors In Case Of Existing Companies)

DIR-3 Form is used by the person who is intending to become a director of the existing company.

Procedure to obtain DIR-3 Form

Supporting documents

Two supporting documents need to be attached that is:

•   Photograph of the concerned applicant.
•   Proof of identity and Proof of residence.

Physical documents are not necessary to submit.

Digital Signature

The form shall be mandatorily signed by the applicant and the same shall be verified digitally by a:

•   Company Secretary (who is fulltime employment of the company)
•   Managing director or manager.
•   Chief Executive Officer or Chief Financial Officer.

Fee Payment

The fee shall be allowed to pay only through electronic mode.

Verification of e Form

The common cause of rejection

DIN application gets rejected under the following circumstances:

•   Non-submission of supporting documents
•   The application becomes invalid on the want of supporting documents.

DIR-6 Form

DIR-6 Form is used by the directors when there are any changes in the particulars of the directors.

The form shall be signed by the applicant and certified by a Chartered Accountant, Company Secretary, Cost accountant (whole time practice), Director of an existing company.

Legal consequences of not filing DIN

Consequences of not filing annual returns

According to Companies Act 2013, every company who have not filed their annual returns to MCA within the sixty days of the Annual General Meeting and within 30 days for a financial statement, shall be held liable.

Directors responsibilities

Directors need to ensure that the company is adhering to rules and regulations. Directors are held accountable in the case the company makes default on compliance or dues payable.

Directors disqualification & Fine and Imprisonment

In case the company has not filed its annual returns for the continuous three years and all the person’s who were directors during that time will be disqualified and his/her DIN would automatically get cancelled and he would become “inactive” and they such persons will be prohibited from further appointment as a director for the period of five years from the date of disqualification.

Further, he/she would be imprisoned for a term extended up to six months or with a fine not lesser than fifty thousand and it might extend to one lakh, in case director has not filed even after 270 days from the date on when the company should have filed.

Consequences of eForm DIR-3 KYC

What is KYC and who has to fill it?

In order to update its registry, MCA is conducting know Your Client(KYC) of all the directors of the companies annually through eForm, DIR-3 KYC.

Who has to fill it?

Every director who has been allotted a Director Identification Number and whose status has got approved on or before 31st March are applicable to file eForm.

After the due date of which KYC form has to be filed, and all the forms of DIN which have been previously marked approved will be now in deactivated status with the reason of “non-filing of DIR-3 KYC”. Once the prescribed fee is paid it will be activated.

Disqualifications of Directors

The following points the investors to know how DIN could be useful in knowing the disqualification of directors:

•   The first and foremost point is, in case the company has failed to file the financial statements and annual returns for the continuous period of three years company is removed from his directorship.
•   He has not repaid the deposit taken or paid interest or redeemed any debentures such failure to pay or redeem has taken place for one year or more. For the period of five years, he shall not work in that company or any other company.

All Forms related to DIN apart from Form SPICe

• The Director Identification Number provides a unique identity to the director, helps in maintaining information of all directors in a database.
• The DIN obtained is used for a lifetime that is DIN is specific to the individual and not for the companies. For instance, if a director of one company wants to start another company, he uses the same DIN.
• DIN is expected to bring more transparency in the filing returns and tax administration processes and is expected to be useful for an error-free filing of returns and claiming refunds by the taxpayers.