On 12 June 2020, the registry modernisation legislation was passed to support businesses in an evolving digital economy. This introduces a new Director Identification Number (DIN) regime to prevent the appointment of dishonest directors as well as to facilitate traceability of previous company relationships.

The new law will require each person who consents to be a director to confirm their identity and obtain a unique Director Identification Number. The person will keep that Director Identification Number permanently, even if they cease to be a director.

Persons appointed as directors within 12 months of the new regime’s operation will have 28 days to apply for a Director Identification Number.

Those persons that are currently directors will also be required to apply for a Director Identification Number; however, they will not be required to do so until the Minister so specifies (by legislative instrument). Current directors should therefore remain on alert for announcements from the Minister’s office in this respect.

In short, on and from the Application Day, new Part 9.1A of the Corporations Act will require:

  1. Existing directors to apply for a DIN within a prescribed period (which is presently yet to be specified);
  2. Persons appointed as directors within 12 months of the Application Day to apply for a DIN within 28 days of their appointment; and
  3. Persons appointed as directors after 12 months of the Application Day to apply for a DIN prior to being appointed as a director.

There are civil and criminal penalties for persons that fail to apply for a DIN within the applicable timeframe.

Further, the Act prohibits persons from:

  1. Knowingly applying for multiple DINs; and
  2. Misrepresenting a DIN to a government body or registered body.

There are criminal penalties attached to each of these acts, and the registrar will have the power to issue infringement notices.

Benefits of the DIN Requirement

It is expected that the new DIN requirement will:

  1. Assist regulators to better detect, deter and disrupt illegal “phoenixing” activities; and
  2. Generally improve the integrity of corporate data.

Phoenixing occurs when the controllers of a company deliberately avoid paying liabilities by shutting down an indebted company and transferring its assets to another company.

As the DIN regime will prevent the use of fictitious identities and provide traceability of a director’s relationships across companies, it will assist regulators and external administrators when investigating illegal phoenixing activities.

Further, the new law will improve data integrity and security and provide for simpler more effective tracking of directors and their corporate history (i.e. by using their DIN, rather than other personal information).