Recent changes to the Corporations Act 2001 (Cth)have brought in new requirements for directors of all Australian companies and entities registered through the Australian Securities and Investments Commission (ASIC).
As of 1 November 2021 all company directors are required to have a Director Identification Number (DIN) which will confirm their identity. A DIN is a unique identifier that will be issued to a director personally and permanently, much like a tax file number or a state/federal customer reference number.
The new measures will apply to current directors, new directors and anyone who intends to become a director.
Why the changes?
It is estimated that illegal phoenixing activity within Australian companies costs the Australian economy between $2.9 billion and $5.1 billion every year. This has been somewhat combatted by the introduction in February 2020 of new civil and criminal penalties which target this type of activity and other creditor defeating dispositions. You can read our previous article on illegal phoenixing activity here.
The new DIN provisions are intended to expand on the phoenixing measures by simplifying the task of identifying, tracing and contacting directors who may be involved in illegal activity. The DIN is intended to:
- provide traceability of a director’s profile and relationships across different companies and over a lengthy period;
- create insights into businesses and individuals on the identity and affiliations of directors; and
- prevent a director from using an alias, nickname, fake name or false identity.
The new DIN regime will assist external administrators, receivers and regulatory authorities to investigate a director’s prior involvement in unlawful activity and enable better tracking of directors of failed companies or with an otherwise poor corporate history. It is also a simpler and more effective system which hopes to provide further efficiency in the liquidation process.
Do I need a DIN?
If you are a director of an Australian company, of if you intend to become a director of a company, you will need a DIN. The DIN will remain with you permanently, even if you cease being a director.
The DIN requirement applies to all directors of Australian companies, whether Australian residents or non-residents.
You will also need a DIN if you are a director of:
- a corporate trustee;
- a charitable or not-for profit organisation that is a company;
- a registered Australian body or an incorporated association that is registered with ASIC; or
- a foreign company that is registered with ASIC and is carrying on business in Australia.
How do I get a DIN?
Australian residents may apply for a DIN through the Australian Business Registry Services website. Applications may be online, by phone or by written application.
Directors who do not live in Australia may be able to apply for a DIN online through the ABRS website providing they have a sufficiently established identity through myGov. Otherwise, a non-resident of Australia may need to apply by way of a paper application and provide certified copies of the necessary identity documents.
When do I need a DIN by?
If you were appointed as a director on or before 31 October 2021, you must complete a DIN application by 30 November 2022.
If you were appointed as a director on or after 1 November 2021, the application for a DIN must be made within 28 days of your appointment.
From 5 April 2022, a person must have a DIN before they are appointed as a director.
1 Corporations Act 2001 (Cth), Part 9.1A.
2 Explanatory Memorandum, Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019.
3 Second Reading Speech of Michael Sukkar MP, Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019, , 4 December 2019.
