Every director has to have a legal business identity and a unique identifier to operate a company and its business. In the case of company directors, they have a unique identifier called the Director Identification Number or simply DIN. This number serves as a digital signature to his/her issued legal documents. Irrespective of whether you are a new director or have been holding the position for some time, it is very important to know the DIN application process as it helps you preserve your company director ID while fulfilling the responsibilities assigned to you by the Ministry of Corporate Affairs (MCA).
Once issued, a Director Identification Number (DIN) does not need to be renewed, which makes it much easier for Public Limited, Private Limited, and LLP Company Directors to streamline the administrative processes. Otherwise, the DIN is a form of government-issued ID that keeps track of an individual’s directorships. The annual updating of records using the DIN KYC procedure eliminates the chances of a company facing penalties, which fosters accountability and transparency within the business.
What Is a Director Identification Number (DIN) and Why It Matters
A Director Identification Number, popularly known as DIN, is a unique eight-digit number code issued by the Central Government for individuals who desire to become directors or are already serving as them. The Director Identification Number system is one of the modern systems incorporating technology in the management of corporations and fulfills many important functions, such as:
Key Functions of DIN
Legal Identification:
A DIN serves the purpose of uniquely naming every single director, which means that every director, regardless of the number of firms he or she is associated with, has a particular company director identification number.
Centralized Database:
The DIN is associated with a unique database operated by the Ministry of Corporate Affairs (MCA). This database contains relevant information regarding the individual director, which makes confirmation and monitoring easier.
Streamlining Compliance:
When signing a document such as annual returns or ROC filings, the director has to include their DIN. This adds a level of transparency to the business transactions and promotes accountability within the corporation.
Ensuring Corporate Governance:
The system makes it impossible to fraudulently duplicate directors, which protects the interests of other shareholders and stakeholders as it ties the director with a permanent identification number.
Reasons why a DIN is Important:
Legal Requirement:
The Companies Act, 2013, in sections 153 and 154 mandates registration of the Director Identification Number. Thus, for any director, obtaining a DIN is a legal requirement.
Accountability and Transparency:
A person with a DIN is traceable to every decision they have made as a director, which enables effective corporate governance.
Avoiding Non-Compliance:
Having no valid DIN may expose a director to sanctions such as fines or harsher penalties like disqualification from being a director.
Managing Multiple Entities:
A director who has several different positions with other companies does not have to get a new identification for each entity because one DIN works for multiple companies.
Do You Need a Director Identification Number? Who Must Apply?
Who Should Obtain a DIN?
The following persons are required to obtain a DIN:
- Want to become a director of a newly incorporated company.
- Are you currently serving as a director in a company?
- Have changes in the particulars of his or her directorship (including a name or an address change).
In summary, all directors of Private Limited, Public Limited companies, or LLPs incorporated under the Companies Act, 2013 should apply to enlist a Director Identification Number.
Situations that require a DIN:
Registering a New Company:
Every proposed director should get a DIN while the SPICe+ form is being filed for company incorporation.
Joining an Existing Company:
When a new director is appointed, a board resolution needs to be passed to apply for a DIN on behalf of the new director using Form DIR-3.
Updating Director Information:
In the case that there are any changes to your details, you need to ensure that your DIN is updated via Form DIR-6.
Annual KYC Compliance:
To retain a director’s number, a director must submit their KYC details through Form DIR-3 KYC every year.
Do You Have to Apply?
Yes. In the event you want to be, or remain, a director, you have to apply. Not having a DIN would translate to a breach of the UK Companies Act 2006 (or relevant domestic legislation for directors) and can put your position as a director at risk. As for foreign companies, specifically for those entering a new regulated market, the DIN is of utmost importance for corporate governance along with company compliance.
How to Apply for a DIN: Step-by-Step Process
Getting your Director Identification Number (DIN) should not be hard if you follow the letter that is prescribed in the steps. Here is a comprehensive process for applying for a DIN:
Step 1: Collection of Necessary Documents
Before applying, ensure that you have these documents at hand:
Identity Verification:
A government-issued ID, like a passport for foreign nationals, confirms your identity and serves as proof of identity.
Residential Verification:
A Utility bill, Bank Statement or other similar document serves as Proof for Address Verification.
Digital Signature Certificate (DSC):
Having an active DSC is a prerequisite, as this has to be used to digitally sign the application.
Step 2: Application Form Updated
There exist two main forms based on your circumstances:
SPICe+ Form for New Directors
- It encompasses Parts A and B, Section 1, Interview stage III: It is completed during the incorporation of a company.
- It is the form used during company incorporation. Permits application for 3 DINs for the directors of a new company.
- Complete all the compulsory fields as requested and submit all relevant documents.
eForm DIR-3 for Existing Companies
- Existing company directors are required to fill out an eForm DIR-3 to join the designation.
- Secure a board resolution supporting the appointment of the director, and submit the same alongside the application.
- Confirm that all the details correlate to your Digital Signature Certificate (DSC).
Step 3: Submitting Your Application
Visit the MCA Portal
Proceed to the login page of the Ministry of Corporate Affairs (MCA) web portal and use your DSC to log in.
Complete the Details
Provide your personal as well as business information to the best of your ability.
Attach the Required Documents
Submit the necessary proof documents (identity, address, image, etc.) alongside the board resolutions (when necessary).
Payment
Settle the specified payment required for the application, which is relatively low. Upon payment, you’ll obtain an application number.
Step 4: Verification and Processing
Application Number
After submission, you will receive an application number, which will allow you to track the status of your application.
Review
The MCA checks your application against the formulation criteria as provided in Sections 153 and 154 of the Companies Act, 2013.
Approval/Rejection
Once the process is approved, and all the information provided is compliant with requirements, your DIN is approved and issued. Otherwise, discrepancies found will be communicated where amendments need to be made within 15 days.
Step 5: Receive Your DIN
Issuance:
Once your application is approved, the DIN will be sent to you through email or will be available on the MCA portal.
Lifelong Validity:
Your DIN will always be active, and as it is assigned to all your directorships, you will never need to apply for another DIN regardless of how many companies you serve.
Annual KYC:
Don’t forget to update your DIN KYC details every year through Form DIR-3 KYC to keep your DIN active.
As long as you adhere to all of the aforementioned steps, you will ensure a seamless DIN application process that meets the regulatory standards and encourages effective corporate governance.
What Are the Requirements for Getting a DIN?
Knowing the requirements for obtaining a DIN is important so that you can apply without any difficulties. Below are the prerequisites:
Personal Verification:
- Identity Proof:
A valid government-issued identification document, such as a passport for foreign nationals or a national ID card, would suffice.
- Address Proof:
Current documents like utility bills or bank statements issued recently are examples that illustrate proof of your address.
Digital Signature Certificate (DSC):
- Mandatory DSC:
All applications are required to have a DSC. This stands for Digital Signature Certificate and is used as a means to sign surveillance and guarantees secure transmission and delivery.
- Obtaining a DSC:
It may be purchased from non-entity DSCs from a licensed embodiment. Remember to activate and make your DSC valid for the whole application process.
Supporting Documents:
- Photograph:
Attested passport-size photographs of you taken recently.
- Personal Information:
All required information, like full name with last name, date of birth, and parents’ names, is to be filled in the application provided.
- Professional Attestation:
In some situations, documents to be filed must bear the stamp of a Chartered Accountant, Company Secretary, or Cost Accountant in Professional practice.
- Foreign National Documents:
Non-resident applicants may require further attestation by the Consulate of the Indian Embassy or a Foreign Public Notary.
Fulfillment of these requirements ensures that your application will not face any sort of process delays and your identity as a company director will be verified.
How to Check the Status of Your DIN Application
After your application has been submitted for review, it is only natural that you wonder to yourself, ‘How do I know the progress?’ Here is everything you need to know regarding checking your DIN status:
Check your status online.
- MCA Portal
Log in to the MCA portal through their website to check for your application’s status using your Digital Signature Certificate (DSC).
- Application Number
Track the progress using the application number given during submission.
- Status Messages
The system will display status messages like ‘Pending’, ‘Approved’, or ‘Rejected’.
- Approved: This means that your DIN has been issued.
- Pending: This means your application is being reviewed.
- Rejected: This means there were too many errors or there is too much missing information that needs to be corrected.
What To Do Next
If Pending:
You will have to wait for the MCA to complete the review. This can take up to one month.
If Rejected:
Required changes from the rejection notice have to be complied with, and the application has to be resubmitted within the assigned timeframe, usually 15 days.
It is important for your case of you being a directorship credential to regularly check your status so you remain in the compliance loop and avoid possible delays.
DIN KYC Update and Compliance Requirements
The acquisition of a Director Identification Number does not mark the completion of a user’s compliance obligations. A Director is required to change their Know Your Customer (KYC) information at a minimum once every year to ensure the accuracy of the MCA’s files.
Annual KYC Process
Form DIR-3 KYC
Every director is mandated to fulfill the ‘DIR-3 KYC’ form online that updates the qualifying person’s and director’s details, including the professional conduct of the individual since their last submission.
Submission Deadline
The KYC update is done for each year within a certain period.
Deadline for Submission
The KYC form has to be electronically signed with the user’s Digital Signature Certificate (DSC) to verify the person who has filed the form.
Penalties for Noncompliance
A user has to submit their KYC details updates, or else they may face penalties; in some cases, the user may have their KYC suspended.
Correcting Issues with KYC
Checking Information
Every now and then, a person should look into the filing provided by the MCA to see if their personal as well as business details are correct.
Calendars and Timelines
Be sure to set other calendars with relevant deadlines for the KYC submissions.
Managing KYC Filings
One may use companies like Commenda and let them manage your filings and meet timely compliance deadlines.
In any case and at all times correct records of KYC should be maintained to ensure every step of continuous compliance is done and no hindrances are placed when a person serves as a company director.
What Happens If You Don’t Have a Valid DIN?
Failure to possess a valid Director Identification Number can result in dire consequences for both you and your firm. The DIN is imperative in ensuring that the director’s identity is confirmed and that they are indeed compliant with the rules and regulations of the organization.
Consequences
Legal Penalties
A Director devoid of a valid DIN risks incurring fines or other punitive measures under the Companies Act.
Operational Impacts
The absence or inaccuracy of a DIN can stall the completion of critical documents, hinder the confidence of investors, and even result in a cessation of the company’s activities.
Compliance Issues
The absence of a DIN can lead to non-compliance with legal obligations, which will put the company’s corporate governance systems and processes at risk.
Remedies
Immediate Reapplication
In the event your application is rejected or your DIN becomes invalid owing to non-compliance, it would be imperative to resolve the issues at hand immediately and reapply.
Professional Services Consultation
Hire a specialist to audit your documents to verify that your DIN is active and compliant.
Maintaining a valid DIN will save you from these consequences and help keep your business in check.
How Commenda Helps with Director Identification and Corporate Compliance
Directors often find it cumbersome to manage the entire DIN application process along with its compliance requirements. This is how Commenda helps. Commenda works with you on the DIN application and ensures that compliance with regulatory standards is maintained at all times.
Most Important Features of Commenda:
Complete Service Package:
Commenda is responsible for gathering all relevant business information and preparing your application along with supporting documents. This also requires the application to be checked against the quality standards stipulated by the Ministry of Corporate Affairs (MCA) and compliance with all necessary documents.
Automated Compliance Monitoring:
All compliance with the requirements is done through our advanced tools that track deadlines and KYC update requests. In this manner, legal or operational issues arise due to the Director Identification Number not being kept active and valid.
Expert Guidance:
Supporting service users in completing the forms or addressing differences between them, our specialists are at hand to offer assistance, as all processes are handled by our certified legal and customer care experts, so that only a qualified specialist guides a customer at all stages and addresses compliance issues.
Cost-Effective Solutions:
From application processing to expedited submission, Commenda’s services come for a single fee with ease of service fee, therefore saving the client both precious time and money. Customers are guaranteed to receive affordable service fees that do not include additional obscured charges.
Fast-Track Processing Services:
If your timelines are tight, our expedited service will guarantee that your DIN will be processed in the shortest time possible, usually within 24 to 48 hours.
Support in Other Languages:
International business is multifaceted, and so is our team, who will interface on your behalf in many languages, so there is no loss in communication and efficiency.
Reach out to Commenda today, to start your DIN application and to be guaranteed compliance with all regulatory requirements.
Conclusion
Obtaining and retaining a Director Identification Number (DIN) is a prerequisite for any company director and even more so, in the current corporate face of regulation. The DIN is not simply a number that gives you a link to all your directorships; it is also crucial in enforcing the transparency and accountability systems as well as compliance with the Companies Act of 2013.
Contact Commenda for expert assistance with your Director Identification Number application and compliance needs. Let us navigate the complexities of corporate governance while you focus on growing your business and achieving long-term success.
