DIN surrender has become a heated issue in the present time. The matter became buzzword when Regional Director, Noida issued a show-cause notice to approximately 2.4 lakh directors for surrender of duplicate DINs. Once the directors received show-cause notice, and then was the rise of flames. There were many directors who did not receive show cause notice but they were in possession of multiple DINs, so as a precautionary measure such directors were advised to suo moto surrender the multiple DINs in their possession prior to receving any official Show cause notice for the same.
Before diving directly to the details of surrendering of DIN, there are various facets that need to be known regarding surrender of DIN.
Who is Required to Surrender DIN
The directors if attracts any of the below-listed conditions then in such a situation he would be required to surrender back his DIN mandatorily after following the prescribed procedure for surrendering DIN. The condition which if satisfied would require the director to surrender DIN are as follows:
• Having Multiple DIN’s
• DIN was obtained in a wrongful manner or by fraudulent means
• Death of the concerned individual
• DIN holder is declared as a person of unsound mind by the competent court.
• Concerned Individual has been adjudicated as insolvent
• DIN holder is/was not associated with any company/LLP
How to Surrender DIN
The director who is required to surrender DIN is required to do so by adhering and complying with the procedure prescribed for the surrender of DIN. The Director while surrendering DIN is required to file various eforms which are prescribed in the Companies Act 2013 and the rules made thereunder, which are mandatory for surrendering DIN. Only filing of eforms is not sufficient but the concerned director would also be required to file an application for compounding of offence with the National Company Law Tribunal (NCLT) or Regional Director (RD), as the case may be. The process flow for surrender of DIN is as mentioned below :
Once the above-mentioned process flow is complied by the defaulting director , then the Central Government shall verify the details submitted by the defaulting Director with its electronic records. On successful verification of details with electronics records, the Central Government shall deactivate the concerned DIN .
The Ministry of Corporate Affairs (MCA) vide public notice dated 21st June 2018 deployed a new eform to be called “E Form DIR 5”. This e form is to be used for surrender of DIN.
After deployment of this eform any director intending to surrender DIN shall file the online DIR 5 eform for surrender of DIN. Through this amendment MCA has waved off the physical DIR 5 form w.e.f 21st June 2018 and has substituted the same with the online version of DIR 5 which shall now be used for surrendering of DIN. Also with the advent of this amendment now eform DIR 5 shall be filed individually no requirement exist for attaching it with RD 1 as was the scenario prior to deployment of electronic version of e form. From 21st June 2018 now three individual e forms are required to be filed for surrender of DIN i.e eforms DIR 5( Application for surrender of DIN) ; RD 1(Intimation to Regional Director); GLN 1 (Application for compounding of offence).
Effect of the Amendment
The effect of this amendment is that this amendment is a big relief granted to the defaulting directors. Prior to this amendment, the surrendering of DIN was a tedious task. At one point of time surrendering of DIN had become a nightmare because of the complexities involved the process of surrendering DIN. Many innocent directors had several sleepless nights particularly during the demonetization period, due to the fear of misuse of their DIN.
After 21st June the process of surrendering DIN has gained robust speed. This is due to the main fact that the essential form for surrendering DIN has now been updated from physical version to electronic version which has in a way provided ease in surrendering DIN and reduced the pendency time in processing of the application for surrender of DIN.
With the amendment becoming effective the process of DIN surrender has become speedy as now no compliances are required to be made in physical form but now following the footsteps of Digital India drive, compliances are being migrated from physical to electronic form. The effect of such transition is that ultimately process will become more transparent, speedy, and contribute to faster disposal of the surrender of DIN.
Therefore the above amendment was a must for directors because with the fast-moving steps of technology and upgradation of central Government offices towards digitalization there arised the need of the hour to roll out the physical compliances and substitute them with an electronic version of the same thereby to facilitate easy and convenience to the directors. In other words, the process of surrendering DIN which was once a tedious task will now become easy and speedy after the advent of this amendment.
Hope this article was informative and served your needs relating to the surrender of DIN. Stay connected with MUDS for more updates.