August 7, 2020
What do the new Director Identification Numbers mean for you and what do you need to do immediately.
CONSOLIDATED BUSINESS REGISTER AND DIRECTOR IDENTIFICATION NUMBERS
On 12 June 2020, the Commonwealth Parliament passed all bills necessary for the Consolidated Business Register and regime to come into effect. This Consolidated Business Register intends to consolidate the Australian Business Register (currently administered by the Australian Taxation Office (ATO)) and the 34 business registers (currently administered by the Australian Securities and Investments Commission (ASIC)) in an attempt to streamline engagement with the Australian Government.
As part of the regime, directors will have an obligation to register for a unique identifier known as a Director Identification Number (DIN).
DIRECTOR IDENTIFICATION NUMBERS
The DIN regime has been introduced in an effort to promote good corporate conduct and combat the prevalence of illegal phoenixing.
The DIN is a unique identifier assigned to each person who consents to being a director of an Australian company. Each time a person consents to become a director of a company, the unique DIN will need to be provided.
The intention is that the DIN provides traceability of director’s relationships across companies, enabling better tracking of failed companies and prevent the use of fictitious identities.
A Commonwealth body (yet to be named) will be tasked with the responsibility on enforcing the DIN requirements and imposing penalties for non-compliance. These penalties include both civil and criminal penalties (which can be quite severe).
WHEN DO THESE CHANGES COME INTO EFFECT
The date from which the new DIN regime will take effect will be the earlier of the date prescribed by proclamation or two years after the Commonwealth Business Register legislation receives royal assent (22 June 2020). As such, it could be 23 June 2022 before these rules take effect.
Practically this date could be extended due to the logistical difficulties in completing the consolidation of 35 registers amongst other things.
Once the commencement date has been proclaimed, or the two years has lapsed, the first 12 months will be a transition period in which a person who is appointed a director for the first time (i.e. there are no other current directorships for that director) will have 28 days to apply for a DIN. After the 12 month transition period, directors must apply for their DIN prior to being appointed as a director (or a later period as allowed by the registrar or any applicable regulations).
Once the regime has effect, current directors of registered companies will have a transitional period where they will need to apply for a DIN. This period is to be specified by legislative instrument.
At this stage the procedures and requirements for obtaining a DIN have not been announced and will be subject to public consultation shortly.
WHAT SHOULD DIRECTORS BE DOING NOW?
In preparation for the commencement of these new rules, we recommend that all directors:
- perform a search of the ASIC registers and the Australian Business Register to ascertain the companies of which they are a director and ensure that:
- their name is spelt correctly;
- their date of birth is correct; and
- all other personal details are also correct; and
- update any out-of-date information or inadvertent errors on the registers – this can be done by lodging an ASIC Form 484.
Any errors should be addressed now so as to ensure that the current ASIC register has up to date information and correct details so as to avoid any risk of confusion or irregularities after the regime commences.
HOW CAN WE HELP YOU?
McInnes Wilson Lawyers can help you by:
- performing searches of the ASIC registers and the Australian Business Register;
- updating the records on these registers so that they are accurate;
- provide you with advice on the DIN requirements when the full position on the process and identification requirements are known; and
- assist with restructuring any superfluous entities that are uncovered as a result of your review of your registrations.