14 December 2018

Director Identification Numbers

This article is written by Miriam Kleiner.

Schedule 2 of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2018 amends the Corporations Act to introduce a director identification number (“DIN”) regime.

The primary purpose of this legislation is to assist in deterring phoenix activity.  “The DIN will require all directors to confirm their identity and it will be a unique identifier for each person who consents to being a director. The person will keep that unique identifier even if their directorship with a particular company ceases. As such, the DIN will provide traceability of a director’s relationships across companies, enabling better tracking of directors of failed companies and will prevent the use of fictitious identities. This will assist regulators and external administrators to investigate a director’s involvement in what may be repeated unlawful activity including illegal phoenix activity.”[1]

The legislation requires that a director of a body corporate registered under the Corporations Act apply for a DIN within 28 days of becoming a director (existing directors have 15 months to apply from the date the new requirement starts).  The DIN regime will initially operate with respect to appointed directors and acting alternate directors only, and not de facto or shadow directors.  Directors of foreign registered companies are also required to apply for a DIN.  The length of time for which a person serves as a director is irrelevant – even a director serving for one day is required to apply for a DIN.  A person who expects to become a director may apply for a DIN any time in the 12 months leading up to the appointment.  However, the registrar is able to cancel a DIN which has been issued where the person has not been appointed as a director within a 12 month period.

While the legislation requires that all directors have a DIN, it is a defence if the director applied for a DIN within 28 days of being first appointed as a director and the application has not yet been dealt with.  It is also a defence in relation to this obligation if the director was appointed without their consent.

The legislation also prohibits a person from applying for multiple DINs (unless directed to do so) and misrepresenting their DIN to a Government body.

Civil and criminal penalties apply to contraventions of the DIN requirement.  The infringement notice regime may also be utilised.

Obligation

Maximum Penalty

Requirement to apply for a director identification number within 28 days of appointment

Criminal – 60 penalty units (strict liability)

Civil penalty – $200,000 for an individual; or 1 million for a body corporate

Applying for additional DINs

Criminal – 100 penalty units or imprisonment for 12 months, or both

Civil penalty – $200,000 for an individual; or 1 million for a body corporate

Misrepresenting a DIN

Criminal – 100 penalty units or imprisonment for 12 months, or both

Civil penalty – $200,000 for an individual; or 1 million for a body corporate

Accessorial liability (being involved in a contravention of one of the above obligations)

Civil penalty – $200,000 for an individual; or 1 million for a body corporate



[1] Explanatory Memorandum - Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2018



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