SURRENDER OF DIN - To Avoid Filing of DIR-3 KYC ?

SURRENDER OF DIN……..

Short Summary:

As per amendment every person holding DIN have to file e-form DIR-3 KYC every financial year till 30^th April. Even if such person not holding any Directorship in any company and not intent to get appointment in future still required to file e-form DIR-3 KYC.

However, many professionals/ individuals having question in mind i.e. “Whether a person can surrender his DIN” in case he don’t want to use it in future.

Legal Language:

As per Section 153:

Every individual intending to be appointed as director of a Company shall make an application for allotment of Director Identification Number to the Central Government in such form and manner and along with such fees as may be prescribed.

As per Section 155:

Prohibition to Obtain More than One Director Identification Number

No individual, who has already been allotted a Director Identification Number under section 154, shall apply for, obtain or possess another Director Identification Number.

Rule 11 Surrender of DIN:

The Central Government or Regional Director (Northern Region), Delhi or any officer authorized 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) Rules, 2014] from any person, cancel or deactivate the DIN in case:

       a)     the DIN is found to be duplicated in respect of the same person provided the data related to both the DIN shall be merged with the validly retained number;

      b)     the DIN was obtained in a wrongful manner or by fraudulent means;

     c)      of the death of the concerned individual;

    d)     the concerned individual has been declared as a person of unsound mind by a competent           Court;

    e)      if the concerned individual has been adjudicated an insolvent:

    f)       on an application made in Form DIR-5 by the DIN holder to surrender his or her DIN along with declaration that he has never been appointed as director in any company and the said DIN has never been used for filing of any document with any authority, the Central Government may deactivate such DIN.

As per Section 159:

If any individual or director of a Company, contravenes any of the provisions of Section 153, such individual or director of the Company shall be punishable with

§  imprisonment for a tem which may extend to Six month or

§  with fine which may extend to Rs. 50,000/- and

§  Where the contravention is a continuing one, with a further fine which may extend to Rs. 500/- for every day after the first during which the contravention continues.

Food for Thought:

   

       A.     Whether an individual (DIN holder) can surrender his DIN, If Such DIN never used?

B.     Whether an individual (DIN holder) can surrender his DIN, If Such person not holding any directorship at present, but held directorship in past?

Discussion on Provisions:

As per Section 155, it is clear that if a person holding DIN then such person can’t apply for another DIN. If he does so It shall be punishable u/s 159 of Companies Act, 2013.

Grounds for Surrender of DIN:

Regional Director can cancel / surrender DIN on the basis of situation mentioned in Rule 11.

Rule 11 (a-e) mentioned the situation for surrender of DIN Like (unsound mind, Death, Insolvent etc).

However, Rule 11(f) states that “on an application made in Form DIR-5 by the DIN holder to surrender his or her DIN along with declaration that he has never been appointed as director in any company and the said DIN has never been used for filing of any document with any authority, the Central Government may deactivate such DIN”

Note:

As per Rule 11(f) - when a person made application in DIR-5 for surrender of his DIN to RD has to ensure following conditions:

       -         That he has never been appointed as director in any company; and

       -         The said DIN never been used for filing of any document with any authority.

 Conclusion:

As per rule 11(f), a person can apply for surrender of DIN only in the situation when “DIN is unused and never used for appointment as director in any Company” (except situations like unsound mind, death, and insolvent).

Therefore, one can opine that, if a person held directorship in any company during his life using such DIN, that DIN can’t be surrender by filing of e-form DIR-5.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION