A Director Identification Number requirement has been implemented and is being phased in for all Australian companies. All directors have been able to apply for a Director Identification Number with their myGovID since November 2021 and are encouraged to act now if they have not yet done so.
What is a DIN?
A director identification number (“DIN”) is a unique identifier provided to each person who consents to be a director. Directors will only need to apply once for a DIN and will keep the same DIN forever, even where they change companies or cease being a director. Applying for more than one DIN is an offence under section 1272G of the Corporations Act 2001 (Cth) (“Corporations Act”).
The DIN will provide traceability of a director’s relationships across companies. This will enable better tracking of directors of failed companies and prevent the use of fictitious identities. Regulators and external administrators will be able to investigate a director’s involvement in unlawful conduct such as illegal phoenix activity.
The DIN also provides verification of a director’s identity which has not previously been available and this will improve the integrity of the data and assist in the enforcement action associated with phoenixing. The Australian Business Registry Services (“ABRS”) has been established to maintain the DIN register.
When to Apply?
All new and existing Australian company directors of bodies corporate registered under the Corporations Act, including foreign directors and alternate directors must apply for a DIN.
A director may be subject to an infringement notice, civil or criminal penalties if they have not obtained a DIN within the prescribed timeframes.
How to Apply?
The individual director will first need to obtain a MyGovID and then lodge an application on the Australian Business Registry Services website. Directors will need to have the following information to hand as they apply:
- Tax file number
- Residential address as held by the ATO
- Information from two documents to verify your identity
Verification of your identity can be via:
- Bank account details
- An ATO notice of assessment
- Superannuation account details
- A dividend statement
- A Centrelink payment summary
- A PAYG summary
A director is only able to apply for one DIN even if they change companies, cease to act as director, change their name or move interstate/overseas.
ASIC automatically completes and handles the DIN to ensure that it is linked to the director’s associated companies. Where there are inconsistencies in company records, ASIC may contact the director or their Agent and request an update of the director’s records.
Failing to Comply with the DIN Regime
Failure to apply for a DIN may result in both criminal and civil penalties. You may also be issued with an infringement notice.
These penalties apply for the following circumstances:
- failure to apply for a DIN within the specified timeframe or if requested by the regulator;
- intentionally applying for more than one DIN;
- providing a false DIN; or
- being actively involved in one of the above offences.
The introduction of the DIN was first announced by the Commonwealth Government in September 2017 with the aim of deterring and penalising phoenix activity in order to protect those who were negatively affected by such fraudulent conduct. Illegal phoenix activity occurs when the controllers of a company shut down the company and transfer its assets to another company in order to avoid paying the company’s liabilities. It is estimated that phoenixing costs the Australian economy between $2.9 billion and $5.1 billion annually.
In June 2020, the Federal Government passed the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 to improve upon the integrity of Australian Business registers and create a Commonwealth Business Registry.
The Modernising Business Registers Program was introduced to the new ABRS and streamlines how business information can be viewed and maintained. The ABRS will bring together 31 Australian Securities and Investments Commission (“ASIC”) registers and the Australian Business Register into one place. The ABRS is established to introduce and maintain DINs and has the power to provide, record, cancel and re-issue a director’s DIN.
A key element of the Modernising Business Registers Program was the implementation of the DIN which requires all directors to apply for a unique DIN.
- Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020;
- Corporations Act 2001 (Cth).
If you are a director and require assistance applying for a DIN, please contact us.