On 12 June 2020, Legislation was passed to modernize Australia’s Corporate Registers, from which the new Director Identification Number regime will now come into play.
Until now, there have not been any unique identifiers for individuals wishing to be registered as a director of an Australian company. What this has meant is that the same person can be registered as a director of a number of different companies with slight variations in their registration details each time so that the associated companies may not be picked up when searching the ASIC database. These variations can include:-
Different spelling of names;
Including or omitting middle names;
Interchanging between married and maiden names;
Slight differences in dates of birth; and
Inconsistent “place of birth” information.
Director Identification Numbers (DINs) are being introduced as a way to verify the identity of an individual who wishes to become a director and, as detailed in the Explanatory Memorandum, to assist with the “traceability of a director’s relationships across companies, enabling better tracking of directors of failed companies, and will prevent the use of fictitious identities.” It is anticipated that DINs will also assist investigations with respect to illegal phoenix activities.
So practically, what does this mean? Under the new requirement individuals must apply to the registrar for a DIN prior to being appointed as a company director, unless an exemption or extension is applied. The registrar can then provide the individual with a DIN once they are satisfied that their identity has been verified. There will be a transitional period for existing company directors to apply for a DIN.
Failure to apply for a DIN within the required time frame, giving false information, or engaging in other conduct that may undermine the new DIN requirement may be met with civil and criminal penalties.
It is likely that the new DIN requirements may come into force in early 2021, once a Registrar has been appointed to administer the new regime.
This article is intended to provide general information only in summary format on relevant issues. It does not constitute legal or financial advice, and should not be relied on as such.