Companies Act Section 153

Companies Act Section 153: Application for Allotment of Director Identification Number (DIN)

Section 153 of the Companies Act, 2013 establishes the procedure and requirements for the allotment of a Director Identification Number (DIN). This section is a fundamental component of corporate governance and ensures that individuals who wish to serve as directors in a company are properly identified and registered with the Central Government. The DIN serves as a unique identifier for individuals who are directors of companies, ensuring transparency and accountability in the management of companies. The section also allows for the prescribed procedures for applying for a DIN and outlines the conditions under which the application must be made.

1. Application for Director Identification Number (DIN) (Section 153)

Under this section, every individual who intends to be appointed as a director of a company must first apply to the Central Government for the allotment of a Director Identification Number. The process involves submitting an application in a specified form and in the prescribed manner, which is typically available through the Ministry of Corporate Affairs (MCA) online portal.
The application must be accompanied by the prescribed fee as determined by the Central Government. The prescribed form and manner include specific details about the applicant, such as their personal information, qualifications, and other relevant documentation that the Central Government may deem necessary for processing the application.

2. Purpose of the Director Identification Number (DIN)

The Director Identification Number (DIN) is a unique identification number allotted to an individual who intends to serve as a director in any company. This unique number is important because it facilitates easy tracking of individuals who hold directorial positions within companies and ensures the maintenance of an accurate record of such individuals. The DIN serves as a means of ensuring that there are no multiple or fraudulent identities among the people holding directorial roles, which helps maintain integrity in corporate governance.

3. Prescribed Procedures and Fees

The Central Government has the authority to define the form, manner, and fees that must be adhered to when applying for a Director Identification Number. The specific procedures and fees are typically published in the Companies (Appointment and Qualification of Directors) Rules, 2014, or any updated rules provided by the Government. These may change from time to time to reflect the administrative requirements or technological improvements in processing such applications.

The form to be filled out by an individual seeking a DIN generally includes:

Personal details such as name, address, nationality, and date of birth.

Details of other directorial positions held by the individual, if applicable.

Self-attested copies of identity and address proof to verify the identity of the applicant.

A declaration by the applicant affirming that they are not disqualified from becoming a director under the Companies Act, 2013.

The fee paid for the allotment of a DIN may vary, depending on the policies set by the Ministry of Corporate Affairs (MCA). It is an important part of the administrative process, and failure to pay the correct fee may result in the rejection of the application.

4. Alternative Identification Numbers

In certain cases, the Central Government may prescribe a different identification number that can be used in place of the Director Identification Number (DIN) for the purposes of this Act. This provision is included to ensure flexibility in the system and to accommodate future changes or alternative identification methods that the Government might introduce.
If an individual is allotted or holds this alternative identification number, the application process under this section may either not apply at all or may apply in a modified manner as prescribed by the Central Government.

For instance, this flexibility allows the Government to implement new systems that could streamline the identification process, such as adopting biometric or other digital forms of identification, while still ensuring the core objective of director accountability and transparency is maintained.

5. Implications of DIN Allocation

Once the Director Identification Number (DIN) is allotted to an individual, it becomes a permanent number that stays with the individual throughout their career as a director, regardless of whether they change companies. The DIN is required to be quoted whenever the individual acts in their capacity as a director in any company. This provides a standardized reference that is recognized by the Central Government, the Registrar of Companies (RoC), and all entities involved in corporate administration and compliance.
Moreover, the DIN system helps facilitate the monitoring of compliance with the Companies Act, 2013 by creating a direct link between a director and their directorial roles across multiple companies.

6. Consequences of Non-Compliance

It is essential that an individual wishing to become a director of a company obtains a Director Identification Number (DIN) as stipulated by the Companies Act, 2013. Failure to comply with the requirement of obtaining a DIN could result in the individual being disqualified from being appointed as a director. If an individual is appointed as a director without a valid DIN, the appointment may be invalid, and the company may face penalties or other legal consequences.
Additionally, if a person fails to apply for or maintain an active DIN, they may face fines or restrictions on serving as a director in future.