A director identification number is a unique number allotted to an individual who is a director of a company or intends to become a director of a company. The same understanding is applicable for persons becoming the designated partner of a Limited Liability Partnership Firm (LLP). In general, the DIN is allotted while registering a company or during the process of LLP Registration in India. In the year 2018, the ministry of corporate affairs introduced a new rule under the companies act, 2013 requiring every person holding DIN to file the updated KYC, Mobile Number, and Email ID.
The initiative impacted even those people who were no longer the director of any company. There are many people who hold a valid DIN and find that the new initiative of KYC verification of the DIN holder is problematic as they did not use the DIN or is no longer a director in any company or LLP. The legal position is that the DIN can be voluntarily surrendered in case it has never been used.
This article is of much relevance in view of the recent initiative of the ministry of corporate affairs to reverify the information and documents along with the personal mobile number and email id of the person who has been allotted a DIN at the end of every financial year. The due date of filing the DIR-3 KYC is 14 October 2019 without any ROC Filing Fee for people who have been allotted DIN up to 31st March 2018. However, in case a person miss to file the DIR-3 KYC Form within its due date, it can still be filed after the due date with an additional ROC Filing Fee of Rs. 5000/- for each director KYC filing. Learn More about the process, documentation, and the all-inclusive cost of filing DIR-3 KYC
This massive exercise of KYC verification of all directors is likely to affect more than 50 Lac persons which include around 35 lac directors on the board of companies or designated partners of the LLP. Though the decision to verify the KYC is a welcome move to update the database of directors for proper communication by the government agencies. However, there are many persons who have been allotted a DIN pursuant to their application for allotment of DIN, but they don’t intend to continue to have the DIN anymore. The article is an attempt to present the legal position on DIN with respect to its surrender or deactivation in simple and easy to understand language.
In brief, the DIN is allotted to any person who intends to become director of any company under section 153 of the Companies Act, 2013. For this purpose, the applicant has to submit his KYC documents in Form DIR-3 KYC, the following is the list of documents for director KYC
- Pan Number,
- Identity Proof and
- Address proof
In addition to the above documents a director is to furnish various information in the prescribed DIR-3 Form. In case there is any change in the particulars furnished or documents based on which the DIN was allotted the same need to be intimated to the ROC in Form -DIR-6 within 30 days of change so that the ROC records are amended suitably.
The Central Government acting through their Regional Director, Northern Region, or any other officer as may have been authorized in this regard can cancel or deactivate the DIN under the following situation as per Rule-11 of the Companies (Appointment of Directors) Rules 2014. The DIN is a duplicate allotment, in other words, if the same person has two or more director identification number
- In case it is established that the DIN was obtained by the DIN holder in a wrongful manner. That is to say by furnishing wrong or incorrect information or false and incomplete documents or if the e-form filed for the purpose of DIN allotment were incorrectly certified by a professional
- On the information that the DIN holder has died
- In case the DIN holder has been declared as of unsound mind or adjudicated as insolvent by a competent court of law.
- On an application of surrender made by the DIN holder in the prescribed e-form DIR-5 along with a declaration that the DIN holder has never been a director or designated partner in any company or LLP and has never filed any document or application before any authority by using the DIN number.
“Having discussed the legal position on surrender of DIN as per rules hereinabove, the Voluntary Surrender of DIN is possible only on satisfaction of below two conditions. In other words, a DIN cannot be voluntarily surrendered if the below conditions are not satisfied“
- He has never been appointed as a director in any company or designated partner in an LLP and
- The said DIN has never been used for filling of any documents with any authority
To put it simply a DIN can be surrendered voluntarily only when the holder of it has just got it allotted and did not use it for any purpose whatsoever.
Procedure for Surrender of DIN
In case the DIN holder satisfies the two conditions stated above an application for voluntary surrender of DIN can be made in prescribed form DIR-5. The government fees for such an application has been fixed at Rs. 1000 under the Companies (Registration Offices and Fees) Rules, 2014. Proof of Identity and address along with a self-declaration that the DIN holder has fulfilled all the conditions prescribed under the rule. The DIR-5 needs to be digitally signed by the applicant which further needs to be certified by a professional (CA, CS, CMA in full-time practice) before it is uploaded to the MCA, the government fee needs to be paid through online mode.
Practical Advice. In case the DIN holder qualifies for both the conditions stated above as required to voluntarily surrender the DIN and he or she does not surrender the DIN and also do not file the DIR-3 KYC form within the stipulated date the MCA is bound by law to deactivate the DIN and a deactivated DIN cannot be filed for voluntary surrender. In order to voluntarily surrender the DIN, the holder would be first required to activate the DIN by filing DIR-3-KYC with an additional government fee of Rs. 5000 and only thereafter the surrender application can be filed.
You may refer to an insightful and detailed analysis of the requirement of filing the DIN-3-KYC in a separate article by clicking here.
For further insight, you may refer following law on the subject matter
- Sections 153 and 154 of the Companies Act, 2013
- Rule 11 of the Companies (Appointment of Directors) Rules, 2014
- Companies (Registration Offices and Fees) Rules, 2014