Din Approval by Professionals: A Wrong initiative of MCA (Personal ViewPoint)
I am writing this article on approval of DIN after two years of notification by MCA regarding approval of DIN by Professionals. I am not against the process of MCA to simplify the incorporation procedure as these simplified procedures are assisting us to cope up with the developing world and I know that we should accept simplified procedures instead of criticizing it. But on the way to simplifying the process, the points I am discussing as follows shows the other face of the picture.
Whenever a person wants to be a director in a company, he is required to have DIN no. DIN No. is “DIRECTOR IDENTIFICATION NUMBER” i.e. a unique Identification Number allotted to an individual who is an existing director of a company or intends to be appointed as director of a company pursuant to section 266A & 266B of the Companies Act, 1956 (as amended vide Act No 23 of 2006). For obtaining DIN, earlier the applicant used to send all his data filled in DIN 1 Form along with his ID Proof and Address Proof duly attested by Notary or any Professional i.e. CA/ CS/ CWA to the DIN Cell, Noida. The administrative staff at DIN Cell, used to check all the DIN Forms they receive and used to approve Provisional DIN applied by the applicant after a thorough check process. And in most of the cases, there used to be re-submission of forms because of a no. of mis-match between Proofs attached and Data Filled in DIN Forms, Proofs not self attested or Notary attested, expired Address Proofs, mis-match of signature of applicant etc. But after the notification dated March 26, 2011, DIN Used to be applied online, whereby the Professionals i.e. CA/CS/CWA used to fill the whole data, Check the data/ proofs etc thoroughly and to get the DIN 1 Form digitally sign and the DIN gets approved by STP after the DIN Form 1 is uploaded at MCA Site. Does this approval of DIN by Professionals is a right step/ right option chosen by the MCA. From my point of view, No it is not right to give authority to Professionals to approve the same. Just because of:
1. The First and most important reason is that some powers to approve “something” look nice with the Government authorised Departments, when there is question of not a particular moment rather for a life. As DIN is approved for life time of Director, hence, authority to approve after verification of whole data should vest only with Government authorised Departments/ Cell i.e. DIN Cell and not with Professionals. If, such DIN Forms are to be approved by the Professionals themselves, then what is the necessity to have DIN Cell.
2. Sometimes, we use to read in newspapers that wrong/ fake ID Proofs, address proof etc. are being produced at Government department to get the benefits. Then how a Professional can be held liable later on if the proofs are found fake one. As a Professional can verify the photocopies from the original but he cannot be sure that the proofs are original or the fake one. So, instead of checked by the Professionals, some machinery should be with the DIN Cell, where they can check and verify the originality of PAN Card or address proofs of the applicant
3. Although declaration in form of Affidavit is given by the applicant at time of obtaining DIN that “he has not been declared as proclaimed offender by any Economic Offence Court or Judicial Magistrate Court, he is not disqualified etc. etc.” but the Professional mostly are not aware of such things. And only the DIN Cell with help of MCA can check and identify from the records of MCA and other Departments about economic offence or dis-qualification of applicants. Hence, instead of taking actions against Professionals later on that they did not check the dis-qualification or otherwise, DIN cell must check and objects such approvals of DIN No.
4. What we see in most of the cases that Professionals put their own mobile no. and mail ids while applying for the DIN. As now a days MCA is emphasizing on Green Initiative, hence use to send the notices/ intimations over the email ids or telephone nos. of directors. So if the Professionals will put their own email ids, the motive of MCA will not be completed. If DIN Cell, check and object the email ids that seems to be of the Professionals (like using words CA/CS/CWA etc in email id), then in most no. of cases, the correct email ids and phone nos. of directors can be put over the DIN Forms.
5. What we see in most of the cases, that some Professionals say “jo hoga dekha jayega”. They just try to put the emphasis that DIN should be approved by entering what so ever data and by attaching/ not attaching the proper documents because as it is under STP, no check by the MCA/ DIN Cell is there until and unless some cases are opened by or against the Director. Hence, such incorrect data/ proofs lasts till the life of director unless and until these are checked.
6. Once any wrong information is filled up while applying the DIN like telephone No., E Mail ID, Residential Status, address, pin code or what so ever the case may be, That does not limit to only one company in which he is going to appoint but a no. of companies in which he will be appointed in future until and unless, the same come to the notice of applicant and he files DIN 4 for such change.
7. Various mis-match of data filled in DIN 1 Forms, expired address proofs, un signed i.e. not self attested or notary attested proofs, not clear address proofs etc. can be restricted or removed if DIN Cell start checking and verifying the DIN Forms. As Professionals are also the human being, even after the thorough check, the errors bound to occur. Sometimes error of one can be identified only by the other although the other person checks the same document a no. of times.
8. Hence, instead of holding liable the Professional in future, MCA themselves should undertake this assignment and check regularly the DIN Forms which is the main duty of DIN Cell. As DIN Cell is not there to receive the calls only of the applicants as applicants can even know the process, describe by DIN Cell representatives, through the FAQs given on the site. And if any discrepancy is there, while checking the DIN Forms by the DIN Cell/ MCA, instead of penalizing or taking actions against the Professionals, those errors should be rectified and the necessary documents should be called upon so that correct data can be maintained and a transparent system can be achieved among the corporate.
If MCA DIN Cell today check then at least 20-25 out of 100 will be found which does not suit as per their requirement. As the initiative of MCA to get the DIN approved STP with Digital Signature of Professionals was that companies should be incorporated within 24 hours in near future. But as per current scenario, there are a no. of compliances while incorporating company like to draft rent agreement, to check and verify office building by Professionals before signing Form 18, to draft and attest from notary the Affidavit u/s. 58 A etc, and even for applying name, even after the use of Digital Signatures of Professionals, name gets approved after proper check and verification by the ROC, no company can be incorporated before 3-4 days. Hence, MCA should think over this and should start again the verification of DIN Forms by DIN Cell thoroughly and to put as many objection s so as to have correct database of directors.
CS Mohit Saluja
Practicing Company Secretary
Email id: firstname.lastname@example.org
Tags :Corporate Law