In this article, Animesh Tiwary, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the process of obtaining a Director Identification Number.
Introduction
The director of a company is responsible for managing the day to day affairs of the company. He is the one who gives directions to managers regarding any decision or policy change undertaken by the shareholders or promoters of the company. They may be promoters of the company, especially in the case of private companies, or an employee of the company. The Companies Act, 2013 also recognizes the position of director in the company and fixes the minimum and the maximum number of directors allowed in the company. A director other than the promoter may be appointed by the company by passing a resolution in the general meeting. Therefore, in order to be appointed as director, an individual need to obtain a Director Identification Number (DIN) after the approval from Central Government.
What is a DIN?
Director Identification Number (DIN) is a unique 8-digit number allotted to a person who is appointed the director of a company. The validity for such a number is for a lifetime. He has to make an application in the Form DIR-3 (in case of an existing company) according to Section 153 and 154 of Companies Act, 2013. However, in the case of formation of a new company, the application is made only through SPICe (Form INC-32) at the time of its incorporation.
DIN remains the same for every individual irrespective of the number of companies he has served or is serving as a director.
DIN application is processed by Central Government under the Ministry of Corporate Affairs.
Purpose of obtaining DIN by a director
The basic purpose of obtaining DIN by the directors is to get themselves registered in the database of the government authorities so that they can identify themselves before signing a return, information or application related to the company by mentioning their DIN underneath their signature.
Sections related to Allotment of DIN under Companies Act 2013
Chapter XI – Appointment and Qualification of Directors
Section 153 – Application for allotment of Director Identification Number
This section states that everyone who is intending to be appointed as director of a company shall make an application to the Central government along with fees in the prescribed format. However, after the introduction of Companies (Amendment) Act, 2017, a proviso has been added according to which once a number is allotted to an individual as DIN by the Government, the requirement of this section is exhausted.
Section 154 – Time period specified for allotment of Director Identification Number
The allotment of such DIN must be done within one month of receiving the application under Section 153 in the manner prescribed under the Act.
Section 155 – Prohibition to obtain more than one Director Identification Number
This section prohibits a person, who has been allotted DIN under section 154, to apply for another DIN.
Section 156 – Director to intimate Director Identification Number
This section states that every director, once allotted DIN, shall intimate the same to the company or companies in which he is appointed as director, within one month of receiving the DIN.
Section 157 – Company to inform Director Identification Number to Registrar
This section makes it mandatory for every company to furnish the DINs of all its directors to the Registrar or relevant authorities of central government along with the prescribed fees and in the prescribed format, within 15 days of receiving the intimation by the director or with the additional fees and within such time period as has been specified under Section 403 of the Act.
Failure to abide by the above provision before the expiry of the time period specified under section 403 with additional fee shall result in fine of twenty-five thousand to one lakh rupees for the company and shall attract criminal liability for the officer in default in the form of fine.
Procedure for Obtaining DIN under the Provisions of the Companies Act (2013)
There is a certain procedure laid down under the Companies Act which has to be followed when applying for DIN.
Application for DIN in case of a newly incorporated company
- Any individual who has to be appointed as a director in a new company must apply for DIN only through SPICe (Form INC-32) at the time of incorporation of the new company.
What is SPICe (Form INC-32)?
This form is an integrated form for allotment of DIN, reservation of name and incorporation of a new company. This need to be submitted along with the documents containing details of the directors, subscribers, e-Memorandum of Understanding (Form INC-33) and e-Article of Association (Form INC-34). After the successful submission and scrutiny, the new company is allotted the Company Identification Number (CIN) and director receives DIN. However, the maximum number of directors allowed to apply during incorporation has been limited to 03 (three) directors using this form.
- Documents needed – Proof of Identity (PoI) and Proof of Address (PoA) of the applicant is needed to be provided along with the form. However, attaching PAN card and Aadhar card has been made mandatory while filing SPICe.
Application for DIN in case of an existing company
- A person to become a director in an existing company must apply through eform DIR-3 before the relevant authority and needs to follow certain procedures as mentioned under the Act.
What is Form DIR-3?
This form is required to be filed with regards to the provisions mentioned under Section 153 and Rule 9(1) which states that every individual who is to be appointed director of an existing company needs to apply for DIN through eform DIR-3 to Office of Regional Director (Northern region), Ministry of Corporate Affairs, Central Government along with prescribed fees as provided under Companies (Registration Office and Fees) Rules, 2014.
- Documents needed– Photograph, Proof of Identity (attested copy of passport in case of foreign national), proof of residence, PAN details, a copy of board resolution proposing his appointment as director in an existing company and specimen signature duly verified (all such documents must be scanned and submitted through electronic means only)
Application process for DIN through eform DIR-3
- The applicant needs to fill up the relevant personal details such as name, father’s name, DOB, PAN, place of residence in the form DIR-3 which can be downloaded through MCA website.
- After filling the relevant details, the person needs to attach his photograph and scanned copy of supporting documents duly attested (proof of address and proof of identity in electronic format only).
- Such DIR-3 form must be mandatorily digitally signed by applicant and same shall be verified by a full-time practicing Company Secretary (CS) of the company or Managing Director or the existing Director or Chief Executive officer (CEO) or Chief Financial Officer (CFO) of the company in which the person has to be appointed as a director.
- After digitally signing such form needs to be uploaded and payment of fee of ₹500/- must be made as the filing fee for DIR-3. However, payment made only through electronic mode is accepted. Once the fee is paid, the DIR-3 application is processed within one month of receiving the application.
- Further, an approved DIN is generated, however, a provisional DIN is generated in case if the details are found to be a potential duplicate and the user is intimated of the same through a message in the receipt. It is further verified by the office of DIN cell and upon approval, such provisional DIN can be put to use.
- In case of a foreign national applying for DIN, he should fill the details of valid passport and attach the certified copy of the same in the DIR-3. The supporting documents along with the photograph should be certified by the Indian Embassy or notary of his home country. If he possesses POI or OCI card, then the attestation can be done by a public notary in India.
Precautions to be taken while filing form DIR-3
It must be noted that mentioning PAN details by an Indian applicant is mandatory. Therefore, he must ensure that the personal details provided by him in DIR-3 matches with that mentioned in the PAN details. Any mismatch will result in rejection of the application.
However, after the application is rejected, the Central Government shall notify and provide the reason for the same. An applicant has 15 days to rectify the discrepancy. Further, if the Government is satisfied, it will grant the DIN.
Application process for any change in particulars of director
- Every person who has been allotted DIN can make changes in the particulars of a director through filing eform DIR-6 pursuant to Rule 12(1) of Companies (Appointment and Qualification of Directors) Rules, 2014.
- Such changes in the particulars stated in DIR-3 shall be intimated to the Central Government within 30 days of such change.
- The person has to fill in the relevant changes and attach a copy of proof of such changes and verification in form DIR-7 which shall be scanned and submitted digitally. Moreover, email ID and mobile number are to be given mandatorily. In case there is a change in the applicant’s name, the person must attach gazette notification along with the form DIR-6.
- Further, the form shall be signed by a practising chartered accountant (CA) or company secretary (CS) or cost accountant of the company.
Documents needed– Proof of change in particulars and a copy of verification in the form of DIR-7, both of which shall be self-attested by the applicant.
Precautions to be taken while submitting supporting documents
- An applicant must ensure that the documents submitted are currently valid and have not expired.
- Documents such as Voter id card, driving license, passport, Aadhar number can be submitted as address proof.
- Documents issued by LIC may be used for purpose of DOB and address proof.
Grounds for cancellation of allotment of DIN
The Central Government may cancel the allotted DIN under following grounds-
- In case of issuance of a duplicate DIN to a director, the DIN can be cancelled.
- The DIN allotted will be cancelled on the death of the respective director.
- The person has been declared of unsound mind by the court.
- If the DIN has been obtained by fraudulent basis.
- The person has been adjudicated as insolvent by the court.
Once the person has been allotted a DIN, it remains the same for the rest of his life irrespective of whether he remains a director in a company or not. However, a person can surrender his DIN to the central government by making a declaration that he has never been appointed as a director.
Conclusion
The process of obtaining DIN from the Central government has been made easier after the Companies Act, 2013 by introducing eforms for which application can be made only through electronic mode. This has also resulted in the increase in transparency and speeding up of the whole process. Moreover, the applicants can keep a track of their application through the MCA website and remove any discrepancy indicated by the office of regional director.
