The objective of a new Director Identification Number (“DIN”) for company directors is to assist with identifying company conduct that involves dummy directors and phoenix transactions. Recently, the Treasury Laws Amendment Act 2020 (“the Act”) was passed with the aim of centralising Australian business registers. Under the Act, all current and future directors of an Australian corporation must hold a unique DIN.
The legislation states that every person holding the position of director, whether for an Australian corporation or any registered foreign corporation, must confirm their identity by obtaining a personal DIN. The DIN is then required to be used by each director for all respective director appointments.
The required date of application, supporting documents and process to obtain a DIN has not yet been specified within the Act. It is anticipated that these matters will be outlined in a separate legislative instrument.
The new DIN regime will benefit the Australian business community by:
- increasing a director’s accountability and traceability;
- limiting potential fraudulent activity and phoenixing;
- preventing the use of fictitious identities;
- assisting administrators and liquidators in increasing the accessibility of important information;
- making a director’s historic relationship with a company more readily available;
- ensuring that sensitive personal director information available on publicly accessible corporate registers is no longer available.
It is important that all company directors are aware of the Act and their obligations under the Act. Once further announcements and developments are made relating to the Act, there will be an impulse to act and apply for a unique DIN amongst directors. As soon as a DIN is obtained, this must be registered against all existing director appointments.
Transitional provisions will be available for the first year of operation, and penalties will be imposed for directors who do not apply for a DIN within the allowed time and who otherwise contravene the legislation. ASIC will act as corporate regulator until the Registrar to the Commonwealth Business Registry is appointed.
If you have any queries, or require assistance, please do not hesitate to contact our experienced Commercial Pillar at Burke & Associates Lawyers. We would welcome the opportunity to assist you.
Insight written by Meghan Warren