It is being proposed that all existing and future directors of registered corporations be required to apply for a permanent identification number which will keep track of their various directorships.
The Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 proposes amendments to the Corporations Act 2001 making it compulsory for all newly appointed directors to apply for a unique Director Identification Number (DIN) within 28 days of becoming a director. For existing directors, it is proposed that there will be transitional provisions giving a currently appointed director 15 months to apply for a DIN once the new requirement commences. Those considering becoming a director within 12 months could also apply for a DIN.
With the current system, directors are only required to lodge their details with ASIC but there is no process in place to verify their identity. The new requirements will improve the traceability of a director’s relationship across all companies and allow the regulators to quickly investigate a director’s involvement in what may be repeated unlawful activity, in particular illegal phoenixing.
There will be civil and criminal penalties introduced for directors who do not have a DIN or that fail to apply for a DIN within the applicable timeframe. A director also commits an offence if they knowingly apply for multiple DIN’s or misrepresent a DIN to a registered body or government agency.
Whilst the draft legislation was introduced to Parliament in February, experts recommend that companies prepare for its enactment. We will keep you updated on its progress.
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