Consequences of Appointment of Director of a Company Without Obtaining Director Identification Number (DIN)
Contributed By: Kanikka P Indi
Email id: kanikkapindi@simplybiz.in
Reference of Section 152(3) and 161(1) of the Companies Act, 2013 (‘Act’) – Appointment of Directors
Except the First Directors of the Company, every director of the Company shall be appointed by the Company in its general meeting, keeping in view:
- No person shall be appointed as a director of a Company unless he has been allotted the Director Identification Number (DIN).
- Every person proposed to be appointed as a director by the Company in General meeting or otherwise, shall furnish his / her Director Identification Number (DIN) and a declaration that he/she is not disqualified to become a director under this Act.
Facts of the Case
The Registrar of Companies (RoC) observed that the Company had appointed a person as an Additional Director in the company without a valid Director Identification Number (DIN). In view of Section 152(3) of the Act, appointing a person as an Additional Director in the Company without valid DIN amounted to a major non – compliance.
Penal Provision
As per Section 159 of the Act, if any individual or director of a Company makes default in complying with any of the provisions of Section 152 of the Act.);
such individual or director of the Company shall be liable to a penalty which may extend to Rs. 50,000/-. In case of continuing default, the Company shall be liable for a further penalty of Rs. 500/- per day during which such default continues.
Penalty Imposed by RoC on the Company and its Officers in Default
In view of the above default, the RoC passed an adjudication order directing the Company and its officers in default to
- pay a penalty of INR 41,900/- within 30 days.
- file INC – 28 with the RoC with the payment proof.
Conclusion
The Director Identification Number (DIN) is a 8-digit unique identification number, which is assigned by the Central Government to every Director. One of the main purposes of assigning DIN is to maintain a database of the Director with the Government. Appointing a Director without a DIN, hence results in a major non- compliance.
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