Tuesday, June 16, 2015

How to Surrender Duplicate DIN and Apply for Compounding of Offence

The Ministry of Corporate Affairs has recently issued a number of Show Cause Notices u/s 266G of the Companies Act 1956 to persons holding multiple Director Identification Numbers) DIN. The Notice also states that the Director can apply for compounding of offence under section 621A of the Companies Act, 1956.

The following steps will have to be taken in this regard.

Step 1: Surrender of Duplicate DIN in DIR-5 through e-Form RD-1

The Duplicate DIN has to be cancelled by filing an application for surrender of DIN in Form DIR-5 through e-Form RD-1.

The following information is required in DIR-5:
a) Applicant's Name
b) DIN
c) Reasons for surrender of DIN
d) PAN (self attested copy)
e) Any one of Passport, Voter's ID, Driving License, Aadhar Card (self attested copy)
f) Address
g) Photograph
h) Certification by CA/CS/CMA
i) Notarized Affidavit

The DIR-5 is to be attached to Form RD-1 along with a Board Resolution from the company in which the person is Director and an Affidavit from the Director on Rs. 10 stamp paper.

The Board Resolution would state that the Board authorizes the Director to surrender his/her duplicate DIN by making an application to the relevant government authority. The Affidavit would mention that the duplicate DIN was allotted inadvertently and has not been used by the Director for any kind of filing with the MCA authorities. Further state that now the duplicate DIN is being surrendered through DIR-5 dated _____ and an application for compounding of offence will be filed with the Regional Director/Company Law Board.

Step 2: Filing of Compounding Application with the RD/CLB in e-Form GNL-1

After filing of DIR-5 in e-Form RD-1, an application for compounding of offence under Section 621A of the Companies Act 1956 (corresponding to Section 441 of Companies Act 2013, which is yet to be notified) has to be filed in e-Form GNL-1.

The application must include the following documents:
a) A petition in Form 1 of Companies (Court) Rules 1959
b) Copy of RD-1 filed along with SRN Receipt
c) Copy of DIR-5
d) Notarized Affidavit
e) Power of Attorney in favor of Professional on stamp paper
f) Memorandum of Appearance signed by Professional
g) Copy of Show Cause Notice
h) Copies of past 3 year's financial statements can be asked for on verification of documents.

The fee for filing will be as per Annexure A of Instruction Kit for e-Form.

Step 3: Filing of Hard Copy of Application with Regional Director/Company Law Board

In case the maximum amount of fine does not exceed Rs. 50,000, the application has to be filed with RD. If the fine exceeds Rs. 50,000, the application has to be filed with CLB.

Two sets of these documents should be prepared: one for filing with RD/CLB and another as office copy to record acknowledgment of submission.

In case the RD/CLB seeks any more information or evidence to support the case, the same may be filed in the manner prescribed.

Step 4: Filing of Order of RD/CLB in Form INC-28 with ROC

On receiving the Order for compounding of offence, the penalty determined must be paid and a copy of the Order along with challan for payment must be filed in e-Form INC-28 with the ROC.