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Corporate Law Update

September 9th, 2020

Director Identification Numbers – more Than Just A Vehicle For Regulation

Miller Harris Business Legal Services: On 22 June 2020 the Commonwealth Government passed into law new legislation requiring company directors and executive officers of companies to obtain and hold a director identification number (“DIN”).

The DIN scheme is a further step in the Government’s ongoing campaign to reduce illegal phoenix activity, which you can read about further here.

When Will The DIN Scheme Commence?

Although the Act has been passed and assented to, the specific timeframes around commencement are unclear. In an earlier press release, the Government stated that it expected that the scheme would commence in early to mid-2021, however the global pandemic is expected to delay the commencement.

The introduction of the DIN scheme comes alongside the decision to amalgamate a number of business and company registers maintained by the government to reduce the complexity and administrative burden involved in the registers.

The DIN scheme means that all directors and executive officers of companies, both current and aspirational, will need to register for a DIN.

There will be a transition period of 12 months during which existing directors must register for a DIN, although the commencement of that period has yet to be fixed.

DIN Scheme For New Company Directors

For new directors, they will need to register within 28 days of being appointed.

Once the transition period ends, all existing directors will need to hold a DIN, and all new directors will need to acquire one before their appointment.

The largest hurdle to registration will be verification of identity, which again remains ambiguous, although it is suspected that the provision of a tax file number will go a long way towards verifying the officer’s identity.

A person’s DIN will remain with them for their lifetime.

Why You Should Not Ignore This

A person who fails to register in the required time, or attempts to register for multiple DINs, is liable to substantial penalties, including periods of imprisonment.

There are still some concerns with the new scheme, including the availability of information on directors, the security of the register, and the requirements for verification of identity, particularly for those directors residing overseas.

Given the importance the Government has placed on combatting phoenixing activity, it is unlikely that these issues will substantially impede the roll-out of the new scheme, and it may be considerable time before the issues are resolved or addressed, if at all.

These changes represent an ongoing measure in the war against phoenixing activity. With the recent changes to insolvency legislation, particularly surrounding phoenixing activity, it is more important than ever to ensure that you are complying with the legislation and your obligations as a director.

Should your require advice about your obligations as a director, or if you have concerns regarding insolvency and winding up, our professional team at Miller Harris Lawyers can assist you to work through what are inevitably tough times.

If you require any assistance at all, or further information, please contact us on 07 4036 9700