In June 2020, the Commonwealth Parliament passed a new law which will require all company directors to be identifiable by a unique number. This number will be in addition to the usual manner in which a director is identified on the ASIC register, by way of full name, address and date and place of birth.
This unique number will be called a Director Identification Number (“DIN”). It is not yet known exactly when the DIN requirement will commence, but it could conceivably be in place by 1st January 2021.
The DIN law will require all directors of Australian companies, including foreign-born or foreign domiciled directors, as well as alternate directors, to obtain and hold a DIN. Each director will be required to verify their identity on application, so one can envisage a typical 100 point style application process.
Once the new law commences, for the first 12 months a person appointed as a director will have 28 days in which to apply for their DIN. For existing directors there will be transitional period (yet to be specified) in which they may apply. The individual will retain his or her DIN indefinitely, even if they cease to be a director
It will be an offence if at the end of the transitional period an existing director has not at least made application for a DIN. The offence will occur automatically, whether or not the director is aware of their breach.
It will also be an offence for a person to hold more than one DIN. In extreme cases of contravention, say from providing false or misleading information, substantial civil or even criminal penalties may apply.
It is intended that ASIC will issue and administer the DINs. However, the package of new laws in which the DINs are included will create a kind of super-registry for business information. The registry will be called the Australian Business Register, to be established under the auspices of the Australian Tax Office. The Registrar will have the right to request an applicant director’s Tax File Number, but not the power to compel disclosure (unless, presumably, the Registrar makes application to the court)
DINs have been introduced in part to deter the illegal business activity of ‘phoenixing’. This is the name given to the conduct of a struggling company’s controllers in which they seek to escape liability for the company’s debts by shutting it down and at the same time transferring its assets to another entity, often involving the appointment of fictitious company officers.
DINS will be searchable at ASIC, making directors’ prior business affairs more transparent. This will serve to promote honesty and mitigate conflicts of interest. At the same time it represents a further diminution of the individual’s right to privacy.