Director Identification Numbers (DIN) – Reminder to ensure your clients are compliant
Following on from my 15 March 2022 article:
(https://www.cathropartners.com.au/insight/director-identification-number-din-5-april-2022-changes), the Australian Securities and Investments Commission (ASIC) is now turning its focus to directors’ compliance in this area.
Background While Australian law has always required a director’s details to be lodged with the ASIC, there has not been a mechanism to verify this data until the introduction of the DIN. Prior to its introduction, there were numerous issues in relation to the accuracy and reliability of the register. These issues included:
- Inconsistent and duplicate entries for the same director. It’s not uncommon to see the same director with a birth date, without a birth date, with and without middle names listed as numerous directors on the register;
- Fraudulent names – Donald Duck and Luke Skywalker have been known to have been used from time to time. The associated Illegal ‘phoenix’ activity that results from fraudulent names being added to the register is something that the DIN system is addressing; and
- Backdated and lodged director appointment and resignation documents which have made it difficult to complete investigations and pursue prosecutions against the right parties for both the regulator and insolvency practitioners tasked with winding up the associated entities.
Who is required to obtain a DIN?
Any person who intends to become a director of a:
- company
- Aboriginal and Torres Strait Islander corporation
- corporate trustee, for example, of a self-managed super fund
- charity or not-for-profit organisation that is a company or Aboriginal and Torres Strait Islander corporation
- registered Australian body, for example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated
- foreign company registered with ASIC and carrying on business in Australia (regardless of where you live).
When do I need to apply for a DIN?
- New directors must apply before being appointed as a director.
- Directors appointed on or before 31 October 2021 have until 30 November 2022 to apply.
How do I apply for a DIN?
- DINs can be applied for at the Australian Business Registry Services Website (ABRS) - https://www.abrs.gov.au/director-identification-number/apply-director-identification-number
Offences and Penalties for Non-Compliance
ASIC’s enforcement role covers four new director ID offences under the Corporations Act 2001 and as noted earlier noncompliance by directors is now a key focus area for the regulator with substantial penalties, both civil and criminal, now in play. These penalties are summarised below:
Given the above, it is now more important than ever that your clients are in a position where they have registered and obtained their DIN with the 30 November 22 deadline fast approaching.
