Surrender of DIN (Director Identification Number)
Why will a person surrender his DIN
Any registration that a human being takes, requires a lot of AMC (Annual Maintenance and Care). For some, certain registrations become tiresome as either they are not using the registration actively or they never used it since the date of being registered. The process of de-registration is also called ‘surrendering’.
In this writeup, we will be specifically dealing with Surrender of DIN, i.e. surrender of Director Identification Number.
Why did we require this registration in the first place?
The year 2006 was a watershed year in the history of the Ministry of corporate/ company affairs. The MCA21 portal was launched. This totally changed the way the companies filed their documents with the Central government. Instead of queues outside the ROC department, the professionals and the employees of the company were worrying about the speed of the internet, server space of the portal, DSC, CMD, DIN, attachments, pdf, scanning and all such computer related terms. A whole new world of technology merger with legal and compliance aspects had emerged.
For a computer to understand logic, it is necessary for the objects that it will study have specific identities. Thus, each company was issued a Corporate Identification Number and each Director was issued a Director Identification Number (DIN).
How was the DIN issued in the early days of the launch of MCA21?
All existing directors of any Company had to apply for getting this number. Every director had to apply in a form (DIN 1) with certain information and documents. Initially there were no fees charged by the Ministry, but later on Rs.100/- was charged.
On an application being so filed, the director would be allotted a provisional DIN. Then the Ministry would search its data bank for any duplicates with the same details, in its records. If none was found, then the provisional DIN would be approved.
How did the Ministry link the DIN to each company in the initial stages of going electronic?
Once a Director was allotted an approved DIN, the Director had to intimate the Company in form DIN 2, within 30 days of such allocation, to all the Companies in which he/she was a Director. Each company would then file in form DIN 3, within 7 days of receiving the form DIN 2, with the MCA portal. Thus the circle of issuing the DIN and linking with the Company took place. The onus was on the Company and the director to update the records of the MCA portal. This method was followed for all directors appointed upto 31st August 2007. Thereafter, the linkage was done through fresh filing of Form 32 (now DIR-12). Thus, under the old act, a person could apply for DIN without being appointed as a Director in any Company. It was like taking a registration for future use.
Under the Companies Act, 2013, a person could apply for DIN only when he was to be appointed as a Director in an existing company or in a new company. For an existing Company, the person has to apply for DIN in Form DIR-3, but the company which is wanting to appoint this person as a Director has to sign the DIR-3.
In a new company, the DIN is allotted when the SPICe forms are filled.
For applying for a DIN do book a call with our experts.
Duplicate DINs
How were multiple DINs issued initially ?
The initial period when the MCA21 portal was launched, the portal was not fully online. Some forms had to be submitted physically with the ministry. DIN 1 was such a form. Thus, at times in the physical checking of the forms, due to human error, duplicate DINs were issued. Also, at times, the forms were filled for the same person with different data. This, too, resulted in the issue of Duplicate DIN.
Can multiple DINs be issued presently?
The MCA portal has gone completely online. Also, linkage with the PAN platform has been done. PAN has to be given when a person is applying for DIN. Thus, now it is next to impossible for a person to hold or be issued multiple DIN.
What is the Process for surrender of duplicate DIN?
Previously, if a person had multiple DINs, the government ran a scheme whereby a person holding multiple DINs could surrender the extra DIN(s) and keep one DIN alive (the oldest DIN allotted had to be kept). After this scheme expired, under the Companies Act, 2013, in its early days, a person could surrender a duplicate by filling a physical DIR 5 and submit it online as an attachment to RD-1. Thus, the RD had the power to accept the surrender application for duplicate DIN. But along with this, a compounding application u/s 621A of the old Act (as Section 441 of the new Companies act, 2013 was not notified) had to be filed in Form GNL-1. Thus, it was a costly error to keep more than one DIN.
Surrender, Cancellation Or Deactivation Of DIN
Provisions under Companies Act, 2013
Section 153 to 159 of the Companies Act, 2013 deals with the provisions of Director Identification Number (DIN). Rules 9,10,10A,11 12 and 12A of The Companies (Appointment and Qualifications of Directors) Rules, 2014 prescribe further processes for application, allotment, intimation, surrender/ cancellation/ deactivation of DIN.
The Act does not talk about the surrender/ cancellation/ deactivation of DIN, but the corresponding Rule 11, has the provisions relating to this.
Section 155 of the Companies Act,2013 prohibits a person from obtaining/ possessing more than 1 (one) DIN. Thus, if under the previous Act or due to mismatch of data or any other reason, a person continues to hold more than one DIN, then under the provisions of Section 159 of the Companies Act, 2013, this individual or director of the company will be liable to pay a penalty of upto Rupees Fifty thousand as a one-time penalty along with a further penalty which may be upto Rupees Five hundred for each day after the first during which such default continues. If the government sends a show cause notice or the person in default suo-moto approaches the MCA for correcting such a default, the penalties are very high.
Rule 11 of The Companies (Appointment and Qualifications of Directors) Rules, 2014
Surrender/ Cancellation
A person may make an application for surrender / cancellation of DIN on the following grounds:
- When the DIN is found to be duplicate (already discussed in details above)
- When the DIN was obtained by fraud- that is by submission of wrongful documents/ forgery/ or other wrongful manner or by fraudulent means.
What is ‘wrongful manner’ and what is ’fraudulent means’ are discussed in this article. Please read the complete article to understand these two phrases.
- When the person who is the holder of the DIN has expired
- When an Indian court declares that the holder of the DIN is an individual of ‘unsound’ mind. Please read the complete article to understand this phrase.
- When an individual is declared/ adjudged as an insolvent person by the courts.Please read the complete article to understand this phrase.
- Voluntarily by a person, if this person was never appointed as a Director and /or Designated Partner in any Company and/or LLP and the DIN was never used for filing any document with any authority.
Deactivation of DIN
In the year 2018, the concept of KYC for DIN was introduced by the Ministry. Any person who has been allotted “Director Identification Number (DIN/DPIN)” on or before 31-Mar- 2018 was ‘Approved’ status, had to file form DIR-3 KYC to keep their DIN updated and active. This had to be done on or before 5-Oct-2018.
Thereafter, for the f.y. 2019-2020, every Director holding a DIN with ‘Approved’ status, has to form DIR-3 KYC (web-based or e-form), before 30th September after the end of the financial year. There are no filing fees involved.
If a person holding a DIN has not filed his KYC, then his DIN will be "Deactivated” and the same can be activated only after filing of the required DIR-3 KYC with filing fees of Rs.5,000/-. Get in touch with www.seedup.in for any DIR 3 KYC queries
Key Takeaway:
A person can surrender all his DINs (provided the conditions are met) or submit all except one for cancellation of few and retention of one (the oldest is allowed to be retained).
Deactivation is done when the KYC form (be it web or the e-form) has not been updated by the DIN holder.
Wrongful manner
This phrase means that if the DIN is obtained on the basis of papers which are not legal or the papers are incomplete in any manner or important data is being hidden, or ambiguous statements etc are being submitted.
Fraudulent means
This phrase means that if the DIN is obtained with an intent to deceive / cheat another person or an authority including the Central Government.
Sound Mind / Unsound Mind
Indian Contract Act, 1872 has defined ‘sound mind’. Thus, an unsound mind will be what a sound mind is not. Section 12 of Indian Contract Act, 1872 states as follows:
What is a sound mind for the purposes of contracting
As a prerequisite for entering into a contract, all the individuals signing the contract, have to be of sound mind. When signing the contract, the individual has to mentally understand the entire contract and take a well-reasoned (rational) decision as to how the contract will affect his/ her interests.
Thus, an individual who is generally of ‘unsound’ mind, but sometimes of ‘sound’ mind, should enter into a contract when he/ she is of ‘sound’ mind.
An individual who is generally of ‘sound’ mind, but sometimes of ‘unsound’ mind, should not enter into a contract when he/ she is of ‘unsound’ mind.
Examples:
(a) A patient in an asylum for mental care, and who at intervals alternates between ‘sound’ and ‘unsound’ mind, should contract during those intervals when he/ she is of ‘sound’ mind.
(b) A normal person should not enter into a contract when he/ she is inebriated or under the control of some drugs etc. Once they back in control of their mind and senses, they should enter into a contract.
Insolvent
The word insolvent has not been defined, but the term “insolvency" has been explained as a state of affairs when an individual, company, body corporate, or any other organisation is not capable of meeting its financial debt obligations as they become due.
Process For Making an Application for Surrender, Cancellation or Deactivation of Din
Filling of Form DIR-5
Eform DIR-5 has to be filed with the MCA V3 portal. The form is split into 3 main parts relating to information etc.:
Details of DIN
Details of the applicant making the application
Attachments & Declarations by the applicant and certifying professional
Under DIN Details:
The holder has to attach his latest passport size photograph (this file should not be larger than 2 MB)
Tick on the reason for surrender/ cancellation / deactivation of DIN from any of the 6 options (as stated above)
Also specify whether the person is retaining any DIN or surrendering all by clicking on the tick box- Yes/ No
If the form has been clicked ‘yes’ for retention, then the DIN holder’s details have to be filled:
Full name, Father’s full name, Din Holder’s date of birth and PAN
Thereafter, fill in the box that asks for the number of DIN’s being submitted, and fill in the DIN details like the number, name of holder and father’s name against each DIN
Applicant's details
Fill in the Contact number and email id of the applicant, and any other information that the applicant wants to submit to make the application complete.
Attachment & Declaration
Mandatory attachments:
A. Proof of identity-
-Voters Identity Card
-Passport
-Driving License
-Aadhaar Card
-PAN Card
B. Proof of residence-
-passport
-election (voter identity) card,
-ration card
-driving license
-electricity bill
-telephone bill
-aadhaar
• For applicants who are Indian, the attachments should not be more than 2 months old from the date of making the application.
• For foreign applicants, the proof of residence should not be more than 1 year old from the date of making the application.
Attachments depending on the option clicked under reason for the surrender/ cancellation/ deactivation of DIN
When option 1 is selected- multiple DIN’s
- Affidavit including declaration that the Ministry is allowed to update with all associated CIN/LLPIN, the details of the retained DIN
When option 2 is selected- death
- Copy of death certificate
When option 3 is selected- wrongful or fraudulent means
- any attachment that will help in taking this matter away from litigation
When option 4 is selected:
- a certified true copy of the court order declaring the applicant / DIN holder as insolvent
When option 5 is selected- ‘unsound’ mind
- a certified true copy of the court order declaring the applicant / DIN holder of having ‘unsound’ mind
If any of the attachments are in languages other than Hindi and/ or English, they should be attached after they have been translated into Hindi / English . Such translation should be done by a professional translator and the attachments should also give the translator’s details like: name, and address and should be signed and sealed by the translator.
In the case of foreign nationals and the language is other than English, translation should be notarised in the country where they are staying.
Optional attachments:
Any other information that the applicant wants to give to the Ministry.
Declaration
2 declarations are given. One by the applicant and the other by the professional certifying the form.
The applicant states that all information and other particulars given in the form are true and correct.
The certifying professional states that the professional has
- verified all the data and attachments to the form and no material data has been suppressed
- that the attachments are legible and that it is understood that the professional wil be liable u/s449 of the Companies Act, 2013 for any wrong certification.
Fees for filing E Form DIR-5
The fees for filing DIR-5 is Rs. 1,000 /- (Rupees One Thousand)
