Introduction:
Any person who is a director or partner of a business or LLP incorporated in India must have a DIN, or Director Identification Number. As a result, after getting a digital signature for the proposed director or partner, DIN is obtained during the business registration or LLP incorporation process. In some circumstances, a DIN is obtained for someone who already has one. In this essay, we’ll look at how to surrender your DIN in such a situation. DIN is linked to the applicant’s PAN or passport number, and each person is only permitted to get one DIN per set of rules and regulations. As a result, before requesting a DIN, the applicant should check the DIN database to see if he or she has been assigned one.
The government has put in place procedures to prevent duplicate DIN formation during the DIN registration process by validating against the PAN database. However, a duplicate DIN may be generated mistakenly in exceptional instances. The government has recently created Form DIR-5 for the surrender of DIN in such instances.
Section 153[1]
Every person who wishes to be appointed as a director of a company must apply to the Central Government for a Director Identification Number in the form and manner prescribed, along with the payments required.
Section 155[2]
A person who has already been assigned a Director Identification Number under section 154 is not permitted to apply for, get, or possess another Director Identification Number.
Section 159[3]
If a person or a company’s director violates any of Section 153’s provisions, that person or company’s director will be punished.
- For a period of six months or more, you will be imprisoned.
- Fines up to Rs. 50,000/- may be imposed, and
- If the contravention continues, a fine of up to Rs. 500/- will be imposed for each day the contravention continues after the first.
Purpose of DIN Surrender
Any reason can be used to file an application for the surrender of a DIN in E-form DIR-5, such as:
- Having several DINs
- DIN was gained in an unethical or fraudulent method.
- Death of the person in question
- A competent court declares the concerned individual to be mentally ill.
- A concerned individual has been declared bankrupt. A concerned individual is/was not affiliated with any corporation or limited liability partnership.
Surrender of DIN (Rule 11)
The Central Government or the Regional Director (Northern Region), Delhi, or any officer authorised by the Regional Director, upon verification of particulars or documentary proof attached to the application received with fee as specified in the Companies (Registration Offices and Fees) Rules, 2014][4] from any person, may cancel or deactivate the DIN in the following circumstances:
- If the DIN is discovered to be duplicated for the same person, the data associated with both DINs must be merged with the validly retained number;
- The DIN was obtained in an unethical or fraudulent manner;
- The death of the person in question;
- The individual in question has been declared mentally ill by a competent court;
- If the person in question has been declared bankrupt
- The Central Government may deactivate a DIN upon receipt of an application in Form DIR-5[5] from the DIN holder to surrender his or her DIN, along with a declaration that he or she has never been appointed as a director in any company and that the said DIN has never been used for filing any document with any authority.
Documents required
The applicant must submit the following documents along with Form DIR-5 for the surrender of the DIN:
- Voters’ identity cards, passports, driver’s licences, Aadhar cards, and PAN cards must all be supplied.
- Address evidence in the name of the applicant, such as a passport, election (voter identity) card; ration card, driving licence, power bill, telephone bill, or Aadhar card.
- If a DIN is surrendered because a person has been adjudicated bankrupt or insane, the court order must be attached. When a person’s DIN is surrendered due to death, a copy of the death certificate must be included.
- If the evidence is in a language other than Hindi or English, it should be translated into Hindi or English by a competent translator who includes his information (name, signature, and address) as well as his seal. For international nationals, a translation performed by a notary in their native country is also appropriate.
- Finally, a chartered accountant in full-time practise, a company secretary in full-time practise, or a cost accountant in full-time practise must sign Form DIR-5.
Surrender of DIN on the Following Grounds
On the basis of the situation specified in Rule 11, the Regional Director may cancel or surrender the DIN. The situation for surrendering DIN was described in Rule 11 (a-e) (unsound mind, Death, Insolvent etc). However, Rule 11(f) states that “the Central Government may deactivate such DIN on an application made in Form DIR-5 by the DIN holder to surrender his or her DIN, together with a declaration that he has never been appointed as a director in any company and that the said DIN has never been used for filing any document with any authority.” As per Rule 11(f), a person who submits a DIR-5 application for the surrender of his DIN to the RD must meet the following requirements:
- That he has never been appointed to the board of directors of any corporation; and
- The aforementioned DIN was never utilised to file any paperwork with any authority.
Multiple DINS
Section 155 states that no person who has already been assigned a Director Identification Number pursuant to Section 154 may apply for, get, or possess another Director Identification Number. However, one may argue that if a person has filed for or received a second DIN; this is a violation of Section 155. In respect of an individual who is in possession of Duplicate/Multiple DINs, he can keep only the Eldest DIN, according to the requirements of the Companies Act read with applicable rules and updates on the MCA website. Later-obtained DINs must be surrendered.” However, it is possible to argue that a later acquired DIN (i.e., a second DIN) should be surrendered by the individual. Surrender of the First DIN is strictly prohibited. The Central Government or Regional Director (Northern Region), Noida, or any officer authorised by the Regional Director may, upon being satisfied on verification of particulars or documentary proof attached with the application received along with fee as specified in Companies (Registration Offices and Fees) R. One may argue, however, that Rule 11 enabled an individual to surrender a DIN if he or she had more than two.
Penalties for multiple DINS
According to Section 159, if any individual or director of a company violates any of the provisions of sections 152, 155, or 156, such individual or director of a company shall be punished with imprisonment for a term not exceeding six months or a fine not exceeding fifty thousand rupees, or both, and if the violation is repeated, with a further fine not exceeding fifty thousand rupees. However, one could argue that it is a default on the side of the individual, and that such an individual should be punished as described above.
Conclusion
A person can apply for DIN surrender only if his or her “DIN is unused and never used for appointment as a director in any Company,” according to rule 11(f) (except situations like unsound mind, death, and insolvent). As a result, one could argue that if a person used such a DIN to hold directorship in any company during his life, that DIN cannot be surrendered by filing an e-form DIR-5.
References:
[1] Section 153: Application for allotment of director identification number, from 1st April 2014[ http://corporatelawreporter.com/companies_act/section-153-of-companies-act-2013-application-for-allotment-of-director-identification-number/]
[2] Section 155: Prohibition to obtain more than one director identification number, from 1st April 2014 [https://ca2013.com/155-prohibition-to-obtain-more-than-one-director-identification-number/]
[3] Section 159: Penalty for default of certain provisions, on 1st April 2014 http://ebook.mca.gov.in/Actpagedisplay.aspx?PAGENAME=17543
[4] The Companies (Registration offices and fees) Rules, 2014 [http://www.bareactslive.com/ACA/act2333.htm]
[5] Application for Surrender of Director Identification Number [https://www.mca.gov.in/MCA21/dca/downloadeforms/eformTemplates/NCA/Form_DIR-5.pdf]
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