All directors of Australian companies will be required, by 30 November 2022, to obtain a Director Identification Number (DIN), to further tackle illegal phoenixing activities, promote good corporate conduct and increase accountability.
Itโs also proposed that the introduction of DINโs for all directors will enable the Government to trace Directors over time and prevent the use of fictitious Director identities.
Tracking directors and their history through a unique number will also reduce time and cost for administrators and liquidators, improving the insolvency process.
Legislation
The DIN was announced as part of the 2020 Federal Budgetโs Modernising Business Registers Program and is legislated by the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) (the Act), which received assent on 30 June 2020. The MBR Program will unify the Australian Business Register (ABR) and 31 business registers administered by the Australian Securities and Investments Commission (ASIC) onto a single platform, administered by the Commonwealth Registrar (the Registrar). This will occur as a separate statutory function of the Australian Taxation Office.
What is a DIN?
A Director Identification Number is a unique and permanent identifier issued to company directors, on application. A directorโs DIN will follow them even when leaving the position they held on application for the DIN.
Who does it apply to?
Currently, all directors of companies and registered foreign companies under the Corporations Act will need to obtain a DIN. This excludes de facto or shadow directors or company secretaries. It is expected that the usual identity documents will be used to prove a Directorโs identity when applying for a DIN. This includes driverโs Licenses, passports, birth certificates and Medicare cards.
How and when should I apply?
A trial period is currently being conducted with a sample of directors prior to all directors being onboarded into the system. Treasury has said this is to ensure the system will provide a robust, reliable and consistent user experience.
Draft exposure materials propose that once testing is complete, the Corporations Act will require existing Directors to apply for a DIN by 30 November 2022. Upon commencement of the program, all companies will be expected to have in place processes that ensure directors and those that are being appointed as a director, will be able to apply for a DIN. Upon commencement, there will be a 12-month transitional period where Directors appointed during the transitional period will have 28 days to apply. Once this transitional period is complete, individuals will need to apply for a DIN before being appointed as a director.
Directors of indigenous corporations which are governed by the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (the CATSI Act) have separate obligations to apply. The MBR Program plans to commence issuing director IDs to CATSI directors after the Corporations Act directors have been onboarded. Currently, itโs expected that existing and newly appointed CATSI directors will be onboarded from the end of testing until 22 November 2023.
What happens if I donโt get a DIN?
Legislation provides for serious civil and criminal penalties for those directors that fail to apply for a DIN or provide misleading information in their application.
How we can assist
For more information on the regime and how it will impact you or your business, please contact your local William Buck advisor.
