A company is an artificial person that can enter into contracts and own property in its own name. However, the company requires some natural persons to make decisions and manage its day-to-day affairs. We refer to these individuals as Directors of the company. In India, every individual who intends to become a director of a new or existing company shall have an identification number known as the Director Identification Number (DIN). In this blog, we will discuss various aspects related to DIN such as its uses, how you can obtain it, what are documents required for DIN application, and compliance requirements as per the Companies Act, 2013.
What is the Meaning of a Director Identification Number (DIN)?
Director Identification Number or DIN is an 8-digit unique identification number allotted by the Ministry of Corporate Affairs (MCA) to every individual who intends to become a director in a new or an existing company. In other words, only those individuals who possess a valid DIN can become a director of a company or a partner of a Limited Liability Partnership (LLP).
The following are the salient features of Director Identification Number –
- An individual can obtain only 1 DIN.
- DIN is person-specific which implies a person can become a director of more than one company at a time with the help of the same DIN.
- Once obtained, DIN is valid for the lifetime of an individual.
- DIN helps the government maintain the database of directors.
Section 153 – 159 of the Companies Act, 2013 and Rule 9- 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014 contain provisions regarding Director Identification Number.
Usage of DIN
According to Section 158 of the Companies Act, 2013, it is mandatory to mention DIN on all returns, information, and particulars furnished under the act if such returns, information, or particulars relate to the director.
In simple words, if a document contains the reference of a director or requires a director’s signature, then the DIN of that director should appear below their name and signature.
How to Obtain DIN
According to Section 153 of the Companies Act, 2013, every individual who intends to be appointed as a director in a new/ an existing company, shall make an application to the Central Government for allotment of DIN. The following are the two ways in which an individual can make an application for obtaining DIN –
The SPICe form is the application form used for registering a company with MCA. It can also serve the purpose of obtaining the DIN for the directors of the proposed company.
Therefore, if an individual intends to become a director of a new company, he should apply to obtain DIN using the SPICe form only by attaching the following documents –
- Proof of Identity (Aadhaar Card/ PAN Card/ Voter ID/ Driving License/ Passport)
- Address Proof (Latest Bank Statement/ Utility bills like electricity bill, telephone bill, etc. not older than 2 months)
In such cases, DIN is allotted to directors on approval of the SPICe form. DIN of a maximum of 3 directors can be obtained using this form.
If an individual intends to become a director of an existing company, he has to make an application in e-form DIR-3 by following the below procedure –
Step 1: Attach the Supporting Documents
Attach the following documents with the e-form DIR-3 –
- Photograph of the applicant
- Proof of Identity (Aadhaar Card/ PAN Card/ Voter ID/ Driving License/ Passport)
- Proof of Residence (Latest Bank Statement/ Utility bills like electricity bill, telephone bill, etc. not older than 2 months)
Step 2: Affix Digital Signature
Affix the digital signature of the applicant on the form. Additionally, the form shall be digitally verified by the Company Secretary/ Managing Director/ Director/ CEO/ CFO of the company in which the applicant is proposed to be appointed as a director.
Step 3: Make the Fee Payment
After uploading the form, make the payment of the filing fee. The form is processed only when the fee is paid.
Step 4: Generation of DIN
If the application is approved, DIN will be generated and communicated to the applicant within 1 month.
However, if the application is defective or incomplete, MCA will send an intimation to the applicant and direct him to rectify the defects or incompleteness, as the case may be. In such a case, the applicant shall resubmit the application within 15 days of receipt of such intimation.
Common Grounds for Rejection of DIN Application
Following are some common grounds on account of which the DIN application is rejected.
- Non-submission of supporting documents
- Submission of invalid or expired documents
- Submission of a duplicate DIN application
- Signature is not affixed on the prescribed place
- Supporting documents are not self-attested
- Applicant’s photograph is not affixed
- Information in the application does not match with the information in supporting documents for example applicant’s date of birth, father’s name, etc.
Compliance Requirements as per the Companies Act, 2013
The Companies Act, 2013, and the governing rules specify the following compliance requirements for DIN holders.
Intimation to Company and Registrar
As per Section 156 of the Companies Act, 2013, every director who has been allotted a DIN, shall intimate his DIN to all the companies in which he is a director in Form DIR-3B, within one month of such allotment.
Further, Section 157 of the Act provides that a company shall furnish the DIN of all its directors to the ROC (Registrar of Companies) if the above-mentioned intimation is received from a director. Such information shall be furnished in Form DIR-3C within 15 days from the receipt of intimation from the director.
Filing of DIR 3 KYC
According to Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, every person who holds a DIN as on 31st March of a financial year shall file an e-form DIR-3 KYC on or before 30th September every year.
If the form is not filed within the due date, a penalty of Rs. 5000/- is levied and the DIN of the director is deactivated until the form is duly filed along with the prescribed fees.
Intimation 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 details of the director as furnished in the DIN application, then he shall intimate such change to the MCA. The intimation shall be made in Form DIR-6 within 30 days of the change.
The applicant and a Practising CA/CS/CMA shall digitally sign the form. Additionally, attach a scanned copy of the proof of changed particulars with the form and a Practising CA/CS/CMA should also attest these attachments.
If the applicant provides satisfactory proof of changed particulars, MCA will update the electronic database with the changes and notify the applicant through a letter, either by post or in electronic mode.
Surrender/ Cancellation/ Deactivation of DIN
According to Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the Central Government or Regional Director may cancel or deactivate the DIN of a director in the following cases:
- DIN is found to be duplicate in respect of the same person;
- If it is found that the DIN was obtained by fraudulent means or in a wrongful manner (after giving an opportunity of being heard to the concerned individual);
- In the case of the death of the concerned individual;
- If the concerned individual is declared as a person of unsound mind by a competent court;
- In case the concerned individual has been declared insolvent; or
- If the DIN holder makes an application in Form DIR-5 for surrender of his/ her DIN, accompanied by a declaration that he/she has never been appointed as a director in a company and that the DIN has never been used.
Disqualification of DIN
According to Section 164(2) of the Companies Act, 2013, if a person is a director of a company that –
- fails to file its financial statements or annual returns for a continuous period of 3 financial years; or
- fails to repay deposits/ pay interest on deposits/ redeem debentures on their due date/ pay interest on debentures/ pay declared dividends for continuously 1 year or more
then such a person can neither be reappointed as a director in the same company nor be appointed as a director in any other company for 5 years from the date of such default. In simple words, the DIN of the director is disqualified.
Penalty for Non-Compliance
The following penalties can be levied for non-compliance.
Failure to Intimate DIN to Company/ Holding of More than 1 DIN
If a person holds more than 1 DIN or fails to intimate DIN to the company in which he is a director, he shall be liable to a penalty that may extend to Rs. 50,000, and a further penalty of Rs. 500 per day.
Failure to Inform DIN to the Registrar
If a company receives an intimation from its director regarding his DIN and fails to inform the Registrar within 15 days of receipt of such intimation, the company and its officers (who are in default) shall be liable to a penalty of Rs. 25,000 and a further penalty of Rs. 100 per day which may extend to Rs. 1 lakh.