More than one DIN

(24^th July 2023)

SHORT SUMMARY:

A Director Identification Number (DIN) is a unique 8-digit alphanumeric number issued by the Ministry of Corporate Affairs (MCA) in India to individuals who wish to become directors of companies. It is a mandatory requirement for any person who wants to hold the position of a director in an Indian company.

The Director Identification Number (DIN) was introduced in India with the enactment of the Companies (Amendment) Act, 2006. The amendment received the President's assent on January 12, 2007, and it came into effect from that date.

In this editorial, the author shall discuss a very important question raised by the directors: Whether a person can hold more than one DIN. If yes, then from which DIN will he accept appointments? If not, then what are the consequences?

The powers of allocation and approval of surrender of DIN vested with Regional Director Northern Region, Delhi.

A.   LEGAL PROVISION:

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:

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.

B.   Question to be Discuss:

ü  Whether a person can hold more than one DIN and what are the consequences for the same?

C.   Discussion on the Questions:

To understand the answer to the above-mentioned questions, we have to understand the purpose of the DIN. The DIN was implemented to enhance corporate governance, track and monitor the activities of company directors, and prevent multiple directorships by individuals without proper disclosure. It has been a crucial identification number for directors in Indian companies since its launch in 2007.

As per this, if a person holds more than one DIN, the purpose of launching a DIN shall be in vain. As such, he can hide his directorship from the other Companies. As DIN is the only source to check the directorship of the Company.

There is a specific section i.e. 155 which talk about Prohibition to Obtain More than One Director Identification Number. Obtaining of more than one DIN is punishable offence u/s 159 of the Act.

D.  Course of Action by such person:

If a person has more than one DIN. Then such a person should immediately apply for the surrender of one DIN with the Regional Director, Delhi. The detailed process of surrendering DIN has been covered in another article.

As per the provisions of Rule 11, a person can surrender his or her DIN if the DIN is found to be duplicated in respect of the same person, provided the data related to both DINs is merged with the validly retained number.

CONCLUSION:

A person can’t have more than one DIN. If a person applies for more than one DIN, then it shall be considered non-compliance as per Section 155 of the Companies Act, 2013. Punishment for Section 155 is mentioned under Section 159.

Penalty U/s 159:

As per Section 159, If any individual or director of a company makes any default in complying with any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.

ADJUDICATION:

There is a order passed by ROC Chennai in case of Shri Thiyagarajan Parthasarathy u/s 454 for noncompliance of Section 155 and imposed penalty as follow:

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). 

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