OBTAINING TWO DINS BY A DIRECTOR – IS IT AN OFFENCE UNDER CA 2013 ?- IMPORTANT CASE LAWS

 

OBTAINING TWO DINS BY A DIRECTOR –

IS IT AN OFFENCE UNDER CA 2013 ?-

IMPORTANT CASE LAWS

SECTION 155 OF THE COMPANIES ACT, 2013 STATES:

“No individual, who has already been allotted a Director Identification Number under section 154, shall apply for, obtain or possess another Director Identification Number.”

SECTION 159 PROVIDES THE PENALTY FOR DEFAULT OF CERTAIN PROVISIONS (INCLUDING SECTION 155):

“Such individual or director of the company who has obtained more than one DIN shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.”

WHETHER SURRENDER OF DUPLICATE IS ALLOWED?

The surrender of DIN application could not be allowed as per Rule 11(f) of the Companies (Appointment & Qualifications if Directors) Rules 2014 since the second DIN was obtained in violation of section 155 of the Companies Act 2013.

CASE LAWS ON DIRECTORS HAVING MORE THAN ONE DIN

1.RD REDUCED THE PENALY  INT THIYAGARAJAN PARTHASARATHY CASE

·      He had an earlier DIN (DIN 03191514 dated 23 Aug 2010) and later obtained a second DIN (DIN 09018479 on 4 Jan 2021) while forming another company.

·      Adjudication order imposed a penalty of Rs 5,03,500 for violation of section 155.

·      In an appeal to the Regional Director, due to absence of deliberate malicious intent, the penalty was reduced (in one commentary) to Rs 50,000.

2.MRS ANUBAMA (CHENNAI CASE)

First DIN obtained 9 Jan 2008; second DIN obtained 23 Apr 2013.

The period of violation was calculated from 1 Apr 2014 to 27 Aug 2024 (3,802 days) and a penalty of Rs 19.51 lakhs (i.e., 50,000 + 3,802×500=19,01,000) was imposed.

3.LAXMAN KRANTI ALLAGADDA KUMAR

First DIN (00933931) on 18 Nov 2006; a second DIN (10495519) on 6 Feb 2024.

Violation for 170 days; penalty of Rs 1,35,000 (50,000 + 170×500) was imposed.

4.SHASHI SINGLA (PUNJAB/CHANDIGARH)

First DIN 00599311; second DIN 10008811 on 1 July 2022.

Penalty imposed: Rs 50,000 + Rs 500×729 days = Rs 4,14,500

SIGNIFICANT TAKEAWAYS

Regulatory bodies (like the RoC / Regional Director) have initiated aggressive action: e.g., in one instance, the Central government stated action had been initiated against 469 persons for multiple DIN

In determining penalty, factors taken into account include: length of period of violation, whether the person was aware, the usage of second DIN (linked to companies), whether the person sought to voluntarily surrender, etc.

SIGNIFICANT REDUCTION IN PENALTY

 For instance, in the Thiyagarajan case the RD significantly reduced the penalty citing absence of deliberate intention

SURRENDER OF THE DUPLICATE DIN

Surrender of the unwanted/duplicate DIN is to be done via Form DIR-5. However, surrendering the second DIN will only be accepted once the violation is adjudicated.

CHECK BEFORE APPLYING FOR DIN

For compliance professionals and persons intending to be directors: it is advisable to check on the portal whether any prior DIN exists (linked to your PAN/identity) before applying for one, to avoid inadvertently obtaining a second one.

R V SECKAR FCS, LLB 79047 19295

“MORE REFORMS IS ON THE WAY WHICH WILL WORK FOR SMALL BUSINESSES: MSME REFORMS BY DECEMBER,2025”

 

“MORE REFORMS IS ON THE WAY WHICH WILL WORK FOR SMALL BUSINESSES:

MSME REFORMS BY

 DECEMBER,2025”

PMO, Finance, and MSME ministries working on cluster-to-national reform roadmap with focus on jobs, cost control, legal ease, and innovation in small business sector.

WHAT REFORMS HAVE ALREADY BEEN ANNOUNCED FOR MSME ?

Several major policy changes are already in motion:

REVISED DEFINITION

The definitions of micro, small and medium enterprises have been significantly revised, meaning more firms qualify for MSME status and its benefits (for example, higher investment/turnover thresholds).

EXPANDED SCOPE OF CREDIT-GUARANTEE SUPPORT

The government has expanded the scope of credit-guarantee support: for instance, guarantee cover for micro & small enterprises increased from ₹5 crore to ₹10 crore.

CUSTOMISED CREDIT-CARD FACILITY

Introduction of new financial instruments for MSMEs: e.g., a customized credit-card facility for micro enterprises, special term loans for first-time women, SC/ST entrepreneurs.

CHANGES IN GST THRESHOLDS

Some reform suggestions are being circulated for further legal and regulatory ease — faster dispute resolution for MSMEs, changes in GST thresholds for small businesses, etc.

WHAT’S PLANNED FOR “BY DECEMBER,2025”

A SOLE MEDIATOR/ARBITRATOR FOR MSME

Amendments to the Micro, Small & Medium Enterprises Development Act, 2006 (MSMED Act) to introduce e-adjudication and a sole mediator/arbitrator for MSME payment disputes, possibly by December.

INCREASE IN GST EXEMPTION LIMITS

Increase in GST exemption limits (for goods/services) for smaller businesses by March 2026, with intermediate steps by end of calendar year.

REDUCTION IN TAX AND COMPLIANCE BURDEN

BOOSTING PRODUCTIVITY

IMPROVED COST COMPETITIVENESS

LEVERAGING AI AND TECH INNOVATION TO STRENGTHEN MANUFACTURING

FINAL THOUGHTS

Thus, while some changes are already in effect or being rolled out, others are earmarked for later in the year (or into early the next fiscal year).

 

R V SECKAR FCS, LLB 79047 19295

THE MINISTRY OF CORPORATE AFFAIRS (MCA) IS ACTIVELY REVIEWING THE COMPANIES ACT FOR FURTHER AMENDMENTS- FURTHER EASE OF DOING BUSINESS

 THE MINISTRY OF CORPORATE AFFAIRS  (MCA)  IS ACTIVELY REVIEWING THE COMPANIES ACT FOR FURTHER AMENDMENTS- FURTHER EASE OF DOING BUSINESS 

The corporate affairs ministry (MCA) is preparing significant amendments to the companies law, aiming to ease business operations and reduce compliance burdens.  

Key changes under consideration include mandatory risk management committees, a stronger audit framework, and simplified capital raising rules, with introduction planned for the winter parliamentary session. 

PROPOSED FUTURE AMENDMENTS (UNDER DELIBERATION) 

The Ministry of Corporate Affairs is actively reviewing the Companies Act for further amendments, potentially including: 

RISK MANAGEMENT COMMITTEES:  

• Introduction of a provision for mandatory Risk Management Committees in certain companies to strengthen oversight of risk detection and resolution. 

 

ELECTRONIC COMMUNICATION & MEETINGS:  

 

Allowing companies to communicate with members in electronic form only and permitting general meetings to be held in virtual, physical, or hybrid modes. Broader recognition of technology in shareholder engagement. 

 

REPLACEMENT OF AFFIDAVITS:  

Replacing the requirement of affidavits for various purposes with simple self-declarations. 

 

DIRECTOR PROVISIONS:  

Revisiting provisions concerning the disqualification of directors and the procedure for the resignation of Key Managerial Personnel (KMP). 

 

EASE IN CAPITAL RAISING:  

 

Streamlined norms for issue of securities and private placements. 

FASTER RESTORATION OF STRUCK-OFF COMPANIES:  

Quicker revival mechanisms through digital facilitation. 

ELECTRONIC COMMUNICATION WITH SHAREHOLDERS: 

Mandatory digitization of shareholder correspondence and disclosures. 

FINAL THOUGHTS   

These reforms are aimed at aligning India's corporate governance framework with global best practices, enhancing transparency, and creating a more competitive and investment-friendly environment for businesses of all sizes, especially MSMEs and startups. 

 

R V SECKAR , FCS ,LLB 79047 19295 

CAN A COMPANY RE-CLASSIFY AMOUNTS STANDING IN THE “SECURITIES PREMIUM ACCOUNT” INTO RETAINED EARNINGS OR RESERVES AS PART OF ITS CAPITAL REDUCTION?

 CAN A COMPANY RE-CLASSIFY AMOUNTS STANDING IN THE “SECURITIES PREMIUM ACCOUNT” INTO RETAINED EARNINGS OR RESERVES AS PART OF ITS CAPITAL REDUCTION? 

NCLT KOLKATA REJECTS CAPITAL REDUCTION LINKED TO SECURITIES PREMIUM RECLASSIFICATION IN MODERN HI-RISE PVT. LTD 

Facts 

• Modern Hi-Rise Private Limited (“MHPL”) had filed a petition under Section 66 of the Companies Act, 2013 for reduction of its share capital.  

• The reduction was proposed in the context of a prior scheme of arrangement (the company had issued non-cumulative redeemable preference shares on 28 March 2019 as part of the amalgamation scheme) and the company proposed to re-classify amounts standing in the “securities premium account” into retained earnings or reserves as part of the reduction.  

• The petition sought to approve the reduction of capital (including reclassification of securities premium) by the NCLT under Section 66 and Section 52 of the Companies Act. 

KEY LEGAL PRINCIPLES 

• Under Section 52 of the Companies Act, 2013, the “securities premium account” must be used only for specific purposes (such as issuing fully paid-up bonus shares, writing off preliminary expenses, etc.). The Act does not permit arbitrarily transferring the securities premium to retained earnings. 

PERMITTED PURPOSES OF CAPITAL REDUCTION  

• The permitted purposes for capital reduction under Section 66 of the Companies Act include extinguishing or reducing liability on partly paid-up shares, cancelling paid-up capital that is lost or unrepresented by assets, and returning excess capital to shareholders.   

Company sought to transfer securities premium to retained earnings, arguing excess reserves and shareholder value creation. 

ROC AND RD (ER) OBJECTON 

• However , RoC and RD (ER) objected, stating: 
  Such reclassification is not permitted under Sections 52, 55, and 66. 
   

• NCLT lacks jurisdiction to approve reclassification of capital reserves. 

 

• Auditor’s certificate failed to flag the accounting inconsistency. 

                   JUDICIAL INSIGHT: 
 
“Securities premium is a capital receipt, not revenue in nature. Its use is restricted to specific purposes under Section 52. Reclassifying it as retained earnings violates GAAP and statutory intent.” – NCLT Kolkata,   

OUTCOME: 

• Petition dismissed by NCLT KOLKATA. 
   

• .Matter flagged for potential professional misconduct under ICAI norms against Auditor of the company 

R V SECKAR , FCS, LLB 79047 19295