This article was updated 22 July 2021. The original article was published on 21 December 2020. You can access the original article here.
In June 2020 the Australian parliament passed a package of legislation designed to centralise Australian business registers. Notably, Schedule 2 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) (the Act) introduces the requirement for all directors of Australian corporations to apply for, and permanently hold, a unique Director Identification Number (DIN).
Under this new initiative, every individual who holds the position of director for an Australian corporation or registered foreign corporation, will be required to confirm their identity and obtain a DIN. The Act provides that a person who is a director immediately before the provisions take full effect will have to obtain a DIN within the time frame to be specified by the Minister. For persons who are first appointed after that date, there will be a transitional period of 12 months during which the person must obtain their DIN within 28 days after appointment, and after the end of the transition period, a person will need to obtain their DIN before their first appointment.
The Government has now released draft exposure materials in relation to the DIN regime. The Government has also announced a public beta trial of the relevant systems is underway before all directors are required to hold a DIN. The exposure materials propose that directors will have between the end of the beta testing and 30 November 2022 to obtain a DIN.
The new regime is designed to increase director accountability and traceability, substantially limiting the potential for fraudulent activity and ‘phoenixing’ (where directors of a company wind up a company to avoid paying its liabilities and incorporate a new company to carry on substantially the same business). The regime is expected to have other benefits such as increasing the accessibility of important information that may assist administrators and liquidators. It is anticipated that the public will be able to search the registry and view a director’s profile, including any historic relationships with different companies. For example, if the director has had past involvement with insolvent trading, that information will be available on the registry.
The release of further draft exposure material gives directors and businesses greater insight into the new regulatory regime. Current and prospective directors can familiarise themselves with the new regime to prepare for the rollout of DINs.
We will continue to provide further updates on this issue as more information becomes available.
This article was co-written by Lawyer, Madeline Tait.
This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice specific to your own situation. Please contact us if you require advice on matters covered by this article.