The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) (Act) passed by the Federal parliament on 12 June 2020 with the effect that directors of Australian companies will soon be identified by a permanent unique number which will be known as a director identification number (DIN). The main purposes of the Act are to:
• ensure that all directors have their identity verified as part of the DIN application process (this includes alternate directors acting as directors, and other officers such as company secretaries as might be prescribed by regulations);
• ensure directors only have one DIN and preventing directors hiding behind aliases or variations of their name;
• prevent director identity fraud;
• apply a consistent regime across Australian body corporates, Aboriginal and Torres Strait Islander corporations, and registered foreign companies;
• further aid in the deterrence and penalisation of illegal phoenix activity; and
• impose criminal and civil penalties for non-compliance.
This Act is one of five other acts which have been passed by parliament which will together introduce a single business register, allow for the governments technology to be modernised and address the issue of phoenix activity.
Whilst the Act is not yet in force it will come into force on the date fixed by proclamation or within two years from the day the Act receives assent. After the Act becomes operational:
• existing directors having to apply for a DIN within a period of time to be announced;
• within the first 12 months (Transitional Period) of the new Act’s operation a person who is appointed a director will have 28 days to apply for a DIN.
• after the Transitional Period ends, a director must apply for a DIN prior to being appointed as a director or such time as specified by the registrar; and
• The resignation of a director will then only take effect from the date of notification and a director that fails to notify the ASIC of their resignation within 28 days may be held accountable.
• There will be criminal and civil penalties for applying for multiple DINs or misrepresenting a DIN with the penalties for a director applying for multiple DINs or misrepresenting a DIN being up to $21,000 (100 penalty units) and/or 12 months imprisonment as at the date of this article.
This is in stark contract with the current process as ASIC does not take steps to verify the identity of company directors and will have a significant impact on:
• the time frame and costs to incorporate companies will be lengthened where the person to be appointed as a director does not already hold a DIN;
• clearly identifying the directorships an individual holds and removing the discrepancies and errors commonly seen in Government registers; and
• making the process of locating directors in insolvency matters by creditors, administrators and liquidators more efficient and easier.
If you have any questions regarding the introduction of DINs or other matters relating to your or duties as a director, please contact Rostron Carlyle Rojas Lawyers: