The Australian Government recently introduced legislation requiring all company directors, including foreign and alternate directors, to obtain a Director Identification Number (DIN). Every director will have one unique number that will link that director with each company they are appointed. The application process and register of DINs will be controlled by the Australian Securities and Investment Commission (ASIC).
The Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 received assent as Act No 69 of 2020 on 22 June 2020. Schedule 2 of the Act amends the Corporations Act 2001 (Cth) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) to introduce a DIN requirement.
Schedule 2 sets out:
- the persons to whom the new requirement applies,
- the obligations associated with the new requirement,
- how the new requirement is administered, and
- the consequences of failing to conform with the DIN requirements.
DINs were first considered in 2015 after they were recommended by the Productivity Commission in its final report into Business Set-up, Transfer and Closure.
The Government has had DINs on their agenda since 2017.
Currently, there is no requirement to prove your identity and details to ASIC when becoming a director of a company. As it stands, many directors have variations to their names and profiles across the ASIC registers and in these cases no link is created across various companies.
Modernisation of the business register and the promotion of “good corporate conduct” are the main objectives to the introduction of DINs. All directors will have to provide 100 points of identification to confirm their identity and disclose any civil and/or criminal penalties for system misuse, before being issued with a DIN. The DIN, like a driver’s licence number, is permanent and will be retained even if the director ceases to act. The unique number will provide a clear relationship of a director across all companies that director is appointed to and prevent the use of fake names or variations to names for directors.
The new law creates four new obligations for directors:
- directors must apply for a DIN prior to being appointed, with a grace period for existing directors,
- directors must apply for a DIN within a prescribed period of being directed to do so by the registrar,
- a person cannot knowingly apply for multiple DINs, and
- a person is prohibited from misrepresenting a DIN to a government body or a registered body.
In addition, the adoption of DINs will help track directors’ involvement in repeated unlawful activity and combat illegal phoenix activity. Including, for example, the act of registering a new company to continue the business of a liquidated company, without paying true market value and to avoid paying any outstanding debts.
DINs will further allow for more efficiency and effective tracking of company directors reducing costs and the administrative time spent on reconstructing corporate history and insolvency processes. Data integrity and security are also strong factors in the introduction of DINs and protecting personal information.
What does this mean for your Company?
It will be the obligation of the Company to ensure that each director has applied for a DIN under the requirements outlined by the Corporations Act and update the company records accordingly.
The new laws will also give companies the ability to fully review directors’ interests and ensure the directors have not made any misrepresentations to the Company or hold any position of conflict.
What does this mean for you?
There is no action required from directors at this point in time, however Blaze Acumen is monitoring the developments closely and will reach out to our clients when we have further information on the processes to apply for a DIN.
It is expected that at the earliest the DIN regime will be implemented in the first half of 2021, with a 12-18 month period for existing directors to obtain their DIN.
Source: CCH IntelliConnect “Company Law – Director Identification Numbers are finally here” 22 June 2020