Process to Get Director Identification Number (DIN) for Foreign Directors in India

Process to Get Director Identification Number (DIN) for Foreign Directors in India. The Director Identification Number (DIN) is a unique identifier assigned by the Central Government to individuals intending to serve as directors or to existing directors of companies, facilitating their identification within the corporate framework. This encompasses the Designated Partnership Identification Number (DPIN) issued under section 7 of the Limited Liability Partnership Act, 2008.
As per the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022, any individual applying for a DIN who is a national of a country sharing a land border with India must obtain security clearance from the Ministry of Home Affairs (MHA), Government of India. The application number for the DIN will not be generated unless this security clearance is attached.
The countries sharing a land border with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. Therefore, nationals from these countries must secure the necessary clearance from the MHA before applying for a DIN.
This measure aligns with the government's efforts to regulate foreign directorships and investments from neighbouring countries, enhancing national security and ensuring compliance with legal standards.
Under the Companies Act, 2013, a director is defined as an individual appointed to the Board of Directors of a company, responsible for managing the company's affairs and making strategic decisions. The Act outlines various provisions regarding the appointment, qualifications, and disqualifications of directors to ensure effective corporate governance.
Mandatory Requirements for Foreign Nationals Seeking DIN
Foreign nationals intending to obtain a DIN and serve as directors in Indian companies must fulfil the following mandatory requirements:
1. Allotment of DIN at the Time of Incorporation of a New Company:
Pursuant to applicable provisions under the Companies Act and relevant rules, the application for allotment of a Director Identification Number (DIN) for an individual proposed to be appointed as a director in a new company shall be made exclusively through the SPICe (Simplified Proforma for Incorporating Company Electronically) e-form at the time of incorporation of the said company. No separate application for DIN shall be entertained in such cases. 
2. Allotment of DIN for Appointment in an Existing Company:

The Board of Directors of the company shall convene a duly constituted meeting and pass a resolution approving the appointment of the foreign national as a Director in the company.

All supporting documents annexed with the DIN application, including the applicant’s photograph, must be duly certified. Such certification shall be carried out either by:

The Indian Embassy or Consulate in the applicant’s home country, or

A Notary Public in the applicant’s home country, or

The Managing Director, Chief Executive Officer, or Company Secretary of the Indian company in which the individual is proposed to be appointed as Director, provided such certifying officer is authorized and the company is duly registered in India.

The proposed director shall furnish a declaration affirming that he/she is not disqualified from being appointed as a director in terms of the disqualifications prescribed under the Companies Act, 2013 and rules made thereunder.

Criteria to Become a Foreign Director in an Indian Company
To be appointed as a director in an Indian company, foreign nationals must meet the following criteria:

Age Requirement: The individual should be at least 21 years old but not more than 70 years old.

Resident Status: For positions such as Managing Director or Whole-Time Director, the individual must have been residing in India for a continuous period of not less than 12 months immediately preceding the date of appointment. However, this condition does not apply to companies in Special Economic Zones.

Independent Director Qualifications: If appointed as an independent director, the individual must possess relevant expertise, experience, and qualifications in fields such as finance, law, marketing, sales, administration, or research related to the company's business.

Procedure for Obtaining DIN
The process for obtaining a DIN for foreign nationals involves the following steps in two categories:
A. Allotment of DIN Prior to Appointment in a New Company
Step1: Application through SPICe Form:
In accordance with Rule 9 of the Companies (Appointment and Qualification of Directors) Rules, 2014, any individual intending to be appointed as a director in a company proposed to be incorporated shall apply for the allotment of a Director Identification Number (DIN) only through the Simplified Proforma for Incorporating Company Electronically (SPICe) form, namely Form INC-32, at the time of incorporation.
Step 2: Limit on Number of Applicants for DIN via SPICe:
 The said form permits the application for DIN allotment for a maximum of three (3) proposed directors only at the time of incorporation. Accordingly, the particulars of up to three individuals not possessing DINs may be included in the SPICe form, and DINs shall be allotted upon approval thereof.
Step 3: Appointment of Additional Directors Post Incorporation:
 Where the number of individuals proposed to be appointed as first directors exceeds three and such individuals do not possess DINs, such excess individuals cannot be appointed as directors at the time of incorporation. However, post-incorporation, the company may appoint additional directors, up to the permissible limit under the Act and Articles of Association, by way of a duly passed board resolution, following the prescribed procedure for DIN application.
B. Procedure for Allotment of DIN for Appointment in an Existing Company
Step 1: Convening of Board Meeting (Section 173 of the Act and Secretarial Standard-1):
 A meeting of the Board of Directors shall be convened in compliance with Section 173 of the Companies Act, 2013 and SS-1, wherein a resolution shall be passed approving the proposal to appoint the individual as a director in the company.
Step 2: Security Clearance from the Ministry of Home Affairs (MHA):

In the event the proposed director is a national of a country that shares a land border with India, prior security clearance from the Ministry of Home Affairs, Government of India is mandatory.

The said security clearance must be annexed with the DIN application at the time of filing.

Step 3: Application to the Central Government for DIN Allotment (Section 153, Rule 9(1), 9(3), 9(4), and 10(1)):

The proposed director shall submit an application in Form DIR-3 electronically through the Ministry of Corporate Affairs (MCA) portal, along with the prescribed fee as per the Companies (Registration Offices and Fees) Rules, 2014.

The application shall be accompanied by the following documents:

One recent passport-size photograph in JPG/JPEG format.

Certified copy of the Board Resolution proposing the appointment.

Specimen signature duly verified.

Valid and active email address and mobile number.

Identity proof: Notarized and/or apostilled copy of the passport (details in DIR-3 must match exactly).

Address proof: Notarized and/or apostilled copy of utility bills (electricity, telephone, etc.), voter ID, driving license, or passport not older than one year from the filing date.

Any other relevant documents as may be deemed necessary.

Form DIR-3 shall be digitally signed by the applicant using their own Digital Signature Certificate (DSC) and shall be further verified digitally by a Company Secretary in full-time employment, or by the Managing Director, Director, CEO, or CFO of the company proposing such appointment.

Where the applicant does not possess a last name, the surname of the father or grandfather shall be stated as the last name, along with a declaration in Form DIR-3A.

Upon successful payment and in the absence of any duplicate entries, the DIN shall be allotted.

Note:

In the case of illiteracy or inability to sign due to medical reasons, thumb impressions must be certified by a competent revenue authority or accompanied by a medical certificate from a government hospital, as applicable.

Permanent Account Number (PAN) is not required for foreign nationals unless such person holds a position in an Indian company having financial transactions exceeding INR 2,50,000/- during the financial year.

Notarial Stamp and Apostille are both verification procedures for authenticating the details indicated in the document. However, there are notable differences in respect of these two verification procedures:

Notarial Stamp

Apostille

Primary purpose is to render a document valid for legal operations or court within the country

Primary purpose is to render a document valid for foreign travel/ settlement for education, employment or business

Notarization is usually done by a Notary duly appointed by the central or state government

Apostille starts with notarization, and then the document goes through the Home Department and then to the Ministry of External Affairs for the final stamp

Cost effective and less time consuming

Comparatively more cost and time involved

Step 4: Processing and Allotment of DIN (Section 154 and Rule 10(2), 10(3), and 10(6)):

Upon receipt of Form DIR-3, the Central Government shall process the application and either approve or reject the same within a period of 30 days from the date of receipt.

If the application is found to be defective or incomplete, a period of 15 days shall be granted for rectification and resubmission.

Once allotted, a DIN is valid for the lifetime of the applicant and is non-transferable under any circumstances.

Compliances Under FEMA for a Foreign Director
The Foreign Exchange Management Act (FEMA) regulates foreign exchange transactions in India. Foreign directors must comply with FEMA provisions, including:

Remittance of Earnings: Any remuneration or sitting fees paid to foreign directors must adhere to FEMA guidelines, ensuring that payments are made in compliance with foreign exchange regulations.

Reporting Requirements: Companies are required to report any foreign directorships and related payments to the Reserve Bank of India (RBI) as part of their annual compliance filings.

Investment Restrictions: Foreign directors must be aware of and comply with FEMA regulations concerning foreign investment in Indian companies, including sector-specific caps and conditions.

Conclusion
Obtaining a Director Identification Number is an important step for foreign nationals aspiring to serve as directors in Indian companies. The process involves obtaining a Digital Signature Certificate, applying for the DIN through the DIR-3 form, and ensuring compliance with various legal requirements, including security clearances and declarations of non-disqualification. Additionally, foreign directors must adhere to FEMA regulations concerning foreign exchange transactions and reporting. It is advisable to consult with legal and professional experts to navigate the procedural and compliance aspects effectively
Frequently Asked Questions (FAQs)
Q1. What is a Director Identification Number (DIN) and who needs it in the context of this article?
Ans. A Director Identification Number (DIN) is a unique identification number assigned by the Central Government in India to individuals intending to serve as directors of a company or existing directors. In the context of this article, it specifically addresses the process for foreign nationals seeking to become directors in Indian companies.
Q2. What is a crucial prerequisite for foreign nationals from certain countries to obtain a DIN in India?
Ans. Foreign nationals who are citizens of countries sharing a land border with India (including China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan) must obtain security clearance from the Ministry of Home Affairs (MHA), Government of India, before applying for a DIN. The DIN application number will not be generated until this security clearance is attached.
Q3. Under which legal framework is the concept of DIN for directors in India established?
Ans. The concept of a director and the requirements for their appointment, including the need for a DIN, are outlined under the Companies Act, 2013.
Q4. Is a separate application required for a DIN if a foreign national is proposed as a director in a new company?
Ans. No, a separate application for a DIN is not required if the foreign national is proposed as a director in a new company. In such cases, the application for the allotment of a DIN should be made exclusively through the SPICe (Simplified Proforma for Incorporating Company Electronically) e-form at the time of incorporation of the said company.
Q5. What is the primary objective behind the Indian government's measure requiring security clearance for DIN applicants from bordering countries?
Ans. This measure aligns with the Indian government's efforts to regulate foreign directorships and investments from neighboring countries, thereby enhancing national security and ensuring compliance with legal standards.

The Director Identification Number (DIN) is a unique identifier assigned by the Central Government to individuals intending to serve as directors or to existing directors of companies, facilitating their identification within the corporate framework. This encompasses the Designated Partnership Identification Number (DPIN) issued under section 7 of the Limited Liability Partnership Act, 2008.

As per the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022, any individual applying for a DIN who is a national of a country sharing a land border with India must obtain security clearance from the Ministry of Home Affairs (MHA), Government of India. The application number for the DIN will not be generated unless this security clearance is attached.

The countries sharing a land border with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. Therefore, nationals from these countries must secure the necessary clearance from the MHA before applying for a DIN.

This measure aligns with the government's efforts to regulate foreign directorships and investments from neighbouring countries, enhancing national security and ensuring compliance with legal standards.

Under the Companies Act, 2013, a director is defined as an individual appointed to the Board of Directors of a company, responsible for managing the company's affairs and making strategic decisions. The Act outlines various provisions regarding the appointment, qualifications, and disqualifications of directors to ensure effective corporate governance.

Mandatory Requirements for Foreign Nationals Seeking DIN

Foreign nationals intending to obtain a DIN and serve as directors in Indian companies must fulfil the following mandatory requirements:

1. Allotment of DIN at the Time of Incorporation of a New Company:

Pursuant to applicable provisions under the Companies Act and relevant rules, the application for allotment of a Director Identification Number (DIN) for an individual proposed to be appointed as a director in a new company shall be made exclusively through the SPICe (Simplified Proforma for Incorporating Company Electronically) e-form at the time of incorporation of the said company. No separate application for DIN shall be entertained in such cases.

2. Allotment of DIN for Appointment in an Existing Company:

The Board of Directors of the company shall convene a duly constituted meeting and pass a resolution approving the appointment of the foreign national as a Director in the company.
All supporting documents annexed with the DIN application, including the applicant’s photograph, must be duly certified. Such certification shall be carried out either by:

The Indian Embassy or Consulate in the applicant’s home country, or
A Notary Public in the applicant’s home country, or
The Managing Director, Chief Executive Officer, or Company Secretary of the Indian company in which the individual is proposed to be appointed as Director, provided such certifying officer is authorized and the company is duly registered in India.

The proposed director shall furnish a declaration affirming that he/she is not disqualified from being appointed as a director in terms of the disqualifications prescribed under the Companies Act, 2013 and rules made thereunder.

Criteria to Become a Foreign Director in an Indian Company

To be appointed as a director in an Indian company, foreign nationals must meet the following criteria:

Age Requirement: The individual should be at least 21 years old but not more than 70 years old.
Resident Status: For positions such as Managing Director or Whole-Time Director, the individual must have been residing in India for a continuous period of not less than 12 months immediately preceding the date of appointment. However, this condition does not apply to companies in Special Economic Zones.
Independent Director Qualifications: If appointed as an independent director, the individual must possess relevant expertise, experience, and qualifications in fields such as finance, law, marketing, sales, administration, or research related to the company's business.

Procedure for Obtaining DIN

The process for obtaining a DIN for foreign nationals involves the following steps in two categories:

A. Allotment of DIN Prior to Appointment in a New Company

Step1: Application through SPICe Form:

In accordance with Rule 9 of the Companies (Appointment and Qualification of Directors) Rules, 2014, any individual intending to be appointed as a director in a company proposed to be incorporated shall apply for the allotment of a Director Identification Number (DIN) only through the Simplified Proforma for Incorporating Company Electronically (SPICe) form, namely Form INC-32, at the time of incorporation.

Step 2: Limit on Number of Applicants for DIN via SPICe:

The said form permits the application for DIN allotment for a maximum of three (3) proposed directors only at the time of incorporation. Accordingly, the particulars of up to three individuals not possessing DINs may be included in the SPICe form, and DINs shall be allotted upon approval thereof.

Step 3: Appointment of Additional Directors Post Incorporation:

Where the number of individuals proposed to be appointed as first directors exceeds three and such individuals do not possess DINs, such excess individuals cannot be appointed as directors at the time of incorporation. However, post-incorporation, the company may appoint additional directors, up to the permissible limit under the Act and Articles of Association, by way of a duly passed board resolution, following the prescribed procedure for DIN application.

B. Procedure for Allotment of DIN for Appointment in an Existing Company

Step 1: Convening of Board Meeting (Section 173 of the Act and Secretarial Standard-1):

A meeting of the Board of Directors shall be convened in compliance with Section 173 of the Companies Act, 2013 and SS-1, wherein a resolution shall be passed approving the proposal to appoint the individual as a director in the company.

Step 2: Security Clearance from the Ministry of Home Affairs (MHA):

In the event the proposed director is a national of a country that shares a land border with India, prior security clearance from the Ministry of Home Affairs, Government of India is mandatory.
The said security clearance must be annexed with the DIN application at the time of filing.

Step 3: Application to the Central Government for DIN Allotment (Section 153, Rule 9(1), 9(3), 9(4), and 10(1)):

The proposed director shall submit an application in Form DIR-3 electronically through the Ministry of Corporate Affairs (MCA) portal, along with the prescribed fee as per the Companies (Registration Offices and Fees) Rules, 2014.
The application shall be accompanied by the following documents:

One recent passport-size photograph in JPG/JPEG format.
Certified copy of the Board Resolution proposing the appointment.
Specimen signature duly verified.
Valid and active email address and mobile number.
Identity proof: Notarized and/or apostilled copy of the passport (details in DIR-3 must match exactly).
Address proof: Notarized and/or apostilled copy of utility bills (electricity, telephone, etc.), voter ID, driving license, or passport not older than one year from the filing date.
Any other relevant documents as may be deemed necessary.

Form DIR-3 shall be digitally signed by the applicant using their own Digital Signature Certificate (DSC) and shall be further verified digitally by a Company Secretary in full-time employment, or by the Managing Director, Director, CEO, or CFO of the company proposing such appointment.
Where the applicant does not possess a last name, the surname of the father or grandfather shall be stated as the last name, along with a declaration in Form DIR-3A.
Upon successful payment and in the absence of any duplicate entries, the DIN shall be allotted.

Note:

In the case of illiteracy or inability to sign due to medical reasons, thumb impressions must be certified by a competent revenue authority or accompanied by a medical certificate from a government hospital, as applicable.
Permanent Account Number (PAN) is not required for foreign nationals unless such person holds a position in an Indian company having financial transactions exceeding INR 2,50,000/- during the financial year.
Notarial Stamp and Apostille are both verification procedures for authenticating the details indicated in the document. However, there are notable differences in respect of these two verification procedures:

Notarial Stamp	Apostille
Primary purpose is to render a document valid for legal operations or court within the country	Primary purpose is to render a document valid for foreign travel/ settlement for education, employment or business
Notarization is usually done by a Notary duly appointed by the central or state government	Apostille starts with notarization, and then the document goes through the Home Department and then to the Ministry of External Affairs for the final stamp
Cost effective and less time consuming	Comparatively more cost and time involved

Step 4: Processing and Allotment of DIN (Section 154 and Rule 10(2), 10(3), and 10(6)):

Upon receipt of Form DIR-3, the Central Government shall process the application and either approve or reject the same within a period of 30 days from the date of receipt.
If the application is found to be defective or incomplete, a period of 15 days shall be granted for rectification and resubmission.
Once allotted, a DIN is valid for the lifetime of the applicant and is non-transferable under any circumstances.

Compliances Under FEMA for a Foreign Director

The Foreign Exchange Management Act (FEMA) regulates foreign exchange transactions in India. Foreign directors must comply with FEMA provisions, including:

Remittance of Earnings: Any remuneration or sitting fees paid to foreign directors must adhere to FEMA guidelines, ensuring that payments are made in compliance with foreign exchange regulations.
Reporting Requirements: Companies are required to report any foreign directorships and related payments to the Reserve Bank of India (RBI) as part of their annual compliance filings.
Investment Restrictions: Foreign directors must be aware of and comply with FEMA regulations concerning foreign investment in Indian companies, including sector-specific caps and conditions.

Conclusion

Obtaining a Director Identification Number is an important step for foreign nationals aspiring to serve as directors in Indian companies. The process involves obtaining a Digital Signature Certificate, applying for the DIN through the DIR-3 form, and ensuring compliance with various legal requirements, including security clearances and declarations of non-disqualification. Additionally, foreign directors must adhere to FEMA regulations concerning foreign exchange transactions and reporting. It is advisable to consult with legal and professional experts to navigate the procedural and compliance aspects effectively

Frequently Asked Questions (FAQs)

Q1. What is a Director Identification Number (DIN) and who needs it in the context of this article?

Ans. A Director Identification Number (DIN) is a unique identification number assigned by the Central Government in India to individuals intending to serve as directors of a company or existing directors. In the context of this article, it specifically addresses the process for foreign nationals seeking to become directors in Indian companies.

Q2. What is a crucial prerequisite for foreign nationals from certain countries to obtain a DIN in India?

Ans. Foreign nationals who are citizens of countries sharing a land border with India (including China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan) must obtain security clearance from the Ministry of Home Affairs (MHA), Government of India, before applying for a DIN. The DIN application number will not be generated until this security clearance is attached.

Q3. Under which legal framework is the concept of DIN for directors in India established?

Ans. The concept of a director and the requirements for their appointment, including the need for a DIN, are outlined under the Companies Act, 2013.

Q4. Is a separate application required for a DIN if a foreign national is proposed as a director in a new company?

Ans. No, a separate application for a DIN is not required if the foreign national is proposed as a director in a new company. In such cases, the application for the allotment of a DIN should be made exclusively through the SPICe (Simplified Proforma for Incorporating Company Electronically) e-form at the time of incorporation of the said company.

Q5. What is the primary objective behind the Indian government's measure requiring security clearance for DIN applicants from bordering countries?

Ans. This measure aligns with the Indian government's efforts to regulate foreign directorships and investments from neighboring countries, thereby enhancing national security and ensuring compliance with legal standards.