Introduction
Every person who occupies a position as a director or partner of a business or LLP (Limited Liability Partnership) that is registered in India must receive a DIN, or Director Identification Number. Therefore, after obtaining the digital signature of the intended director or partner, DIN is collected as part of the business registration or LLP incorporation process. Sometimes a DIN is obtained in error for someone who already possesses one. The information on this page can assist you in understanding “What is DIN?”, “Why it is necessary to surrender DIN?,” what information must be on Form DIR-5 and what documentation is needed to back it when giving up a DIN.
What is DIN?
The Permanent Account Number (PAN) or passport connection of the DIN makes it legal for someone who wants to become a director to obtain one. A person who wishes to become a director might do so in many organisations by getting a single DIN. Therefore, the interested party may check the DIN database to see if they have ever received a DIN from the Central Government before obtaining a DIN or at any point while applying for a DIN.
In order to solve the issue of one application getting many DINs, the Central Government has also devised a checking process wherein, prior to allotting any DIN, it also conducts a check and checks the data supplied by the applicant through its database. It is preferable for the prospective candidate to perform a precautionary check on the MCA portal to see if he has ever received a DIN.
If the applicant's history of any prior DINs is discovered, the current application will be rejected and no new DIN will be issued. The Central Government would be informed if records reveal that the applicant has more than one DIN. The applicant would be required to pay a fine for breaking the law, discard all but one of his DINs, and justify maintaining the remaining ones.
Why is it required to submit a DIN?
1. An unlawfully or dishonestly obtained DIN
If a director who received a DIN by supplying false information or in an unlawful way surrenders the DIN, the regulatory authorities may deactivate the DIN after giving the director a show-cause notice.
2. Every time a director is declared bankrupt
If the director is deemed to be bankrupt, he must surrender his DIN by filing Form DIR-5 along with the court's decision.
3. Multiple Director Identification Numbers
According to Section 153 of the Companies Act of 2013, if a Director has more than one DIN, he must submit a Form DIR-5 application to the Regional Director along with a notarized affidavit stating that the additional DIN has never been used in any document type that must be submitted to the ROC.
4. Whenever a director becomes incompetent
If a court of competent jurisdiction finds a director to be mentally incompetent, the DIN must be given up by submitting Form DIR-5 with the court's ruling attached, under Section 153 of the Companies Act, 2013.
Required paperwork for submitting Form DIR-5
The applicant must attach the following papers to Form DIR-5 in order to relinquish their DIN.
- Identity documentation (such a PAN, voter ID, or Aadhar card).
- Address verification (driver's licence, ration card, utility bill or other).
- If the applicant is an Indian, the documentation shouldn't be more than two months old as of the eForm submission date.
- The address evidence must be older than a year as of the eForm submission date if the applicant is from outside the United States.
- The court will make an injunction if a director is determined to be mentally ill or insolvent.
- Certificate of Death (If the director is deceased).
Conclusion
The process for surrendering a DIN is quite straightforward, but before submitting an application for surrender in Form DIR-5, the DIN holder must ensure that the director hasn't been appointed to any company or other legal entity while in possession of a DIN and that the DIN that is being surrendered hasn't been used in any documents being submitted to a regulatory authority. The procedure of giving up a DIN has been significantly streamlined, made clear, and expedited with the introduction of E-form DIR-5.
