Director Identification Numbers Coming
The much discussed Director Identification Number (DIN) regime has recently been passed into law. All current and aspiring company directors will be required to provide personal identification documents to ASIC to receive a unique, permanent Director Identification Number. The new law also establishes a single Commonwealth Business Registrar to be administered by the Australian Tax Office. The Registrar simplifies the 31 business registers currently maintained between ASIC and the ATO including the Companies Register and the Australian Business Register.
These changes are being introduced to combat illegal phoenix activity. Phoenix activity is the process of stripping a company of its assets then liquidating that entity, leaving creditors with no way to recover their debts, whilst at the same time creating another company into which the assets are transferred for little or no payment and then carrying on the same business in the new company.
Establishing a more cohesive Registrar overseeing the registration of directors will help to more accurately track an individuals directorships and insolvency events. This should lead to efficiency gains in insolvency processes, and eventually serve as a deterrent for rogue directors.
Under the current system an individual does not supply identification to become a director. This has resulted in any one person possibly having multiple listings on the register with small differences in name, address or birth date making it difficult to monitor any given directors activities.
The new legislation is set to become effective by mid 2022 at the latest. Pundits initially expected the Registrar could become active as soon as early 2021, but delays due to COVID-19 look likely to push the start date back to 2022.