One step closer to the introduction of the Director Identification Number Regime
Current and future company directors are one step closer to being required to obtain director identification numbers (“DINs”). The legislation that introduced the new regime is Part 9.1A of the Corporations Act 2001 (Cth), which was inserted into the Corporations Act 2001 (Cth) by Schedule 2 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth). While the legislation commenced on 4 April 2021, it will be some time before all current and future directors will be required to obtains DINs.
What is a Director Identification Number?
A DIN is a unique identification number that existing directors and future directors of a company or a registered body will be required to obtain. To obtain a DIN, directors will be required to confirm their identity.
Once a DIN is issued, it will be kept by the individual permanently. Only one DIN will be made available to each director, and directors will require their DIN to interact with any government agency.
What is the purpose of the Director Identification Number Regime?
The key purpose of the DIN regime is traceability. DINs will provide a mechanism to trace a director’s history and a director’s relationships across different companies. Therefore, the regime will help regulators investigate a director’s involvement in unlawful activity, particularly illegal phoenix activities, which is where a company’s liabilities are deliberately avoided by shutting down an indebted company and transferring its assets to a new company.
In addition to reducing illegal phoenix activities, the regime also aims to prevent the appointment of fictitious directors and improve data integrity.
The following conduct will attract civil and criminal penalties:
- Failing to obtain a DIN within the prescribed period;
- Deliberately providing false identity information;
- Intentionally applying for multiple DINs; and,
- Intentionally providing a false DIN to a government body or body corporate.
Timeline of the Director Identification Number Regime
While the legislation has now commenced, directors will not be required to obtain DINs for some time.
The first step after the commencement of the legislation is a period of testing by the Commonwealth Registrar, which will ensure that the system is reliable and consistent. During the testing period, the DIN system will only be available to directors that the Registrar has invited to participate in testing.
Existing directors will have between the end of testing and 30 November 2022 to obtain a DIN. Directors appointed during the transitional period will be required to obtain a DIN within 28 days of being appointed a director.
Directors of indigenous corporations under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) will have a further 12 months to obtain a DIN.
After the transitional period, individuals will be required to obtain a DIN prior to being appointed as a director.
How can we help?
If you require advice on the DIN requirements, please do not hesitate to reach out to a member of Coleman Greig’s Commercial Advice team, who would be more than happy to assist you.
This material is provided by Coleman Greig Lawyers as general information only in summary form on legal topics current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.