Answers to your questions around the introduction of director identification numbers

On 22 June 2020, the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 received Royal Assent, setting the introduction of a director identification number (DIN) system in motion. This legislation came into effect on 4 April 2021.

The concept of director identification numbers has been discussed since 2015 and is just one measure in a package of reforms now legislated to help prevent phoenixing. Phoenixing is illegal and occurs when a company moves assets away from company ownership or control to avoid paying out liabilities to creditors and employees on the cessation of the company, which then resumes trading as a new and separate company. Phoenixing activities are estimated to cost the Australian economy between $2.9 billion and $5.1 billion annually.

Going forward, DIN’s will enable regulators to:

    1. Better understand how specific individuals and entities are connected
    2. Track directorship history by individual
    3. Identify and flag entities and individuals presenting high risks for phoenixing.

Previously, directors details were required to be registered with the Australian Securities and Investments Commission (ASIC) but there was no legal requirement for ASIC to verify the identities. As a result:

The new requirements provide for proper verification of director’s identities and a single, centralised record for each individual director.

Below we answer some common questions around the introduction of DIN’s.

      What are the key requirements under this legislation?
      The key requirements the legislation introduces are:

        1. Persons must apply for a DIN before they are appointed as a director, or within a specified timeframe if/as directed by the registrar
        2. Persons must not deliberately apply for multiple DIN’s, provide false information to the registrar or misrepresent a DIN.

      Do I need to obtain a DIN?
      You are required to obtain a DIN if you are a director or acting alternate director of any of the following:

        1. A company or an Aboriginal and Torres Strait Islander corporation
        2. A corporate trustee
        3. A charity or not-for-profit organisation that is a company or an Aboriginal and Torres Strait Islander corporation
        4. A registered Australian body
        5. A foreign company that is operating in Australia and registered with ASIC.

      You are not required to obtain a DIN where you:

        • Are a company secretary, but not a director
        • Are acting as an external administrator of a company
        • Are operating a business as a sole trader or partnership
        • Have reference to ‘director’ in your job title, but have not been appointed as director under either the Corporations Act 2001 (Cth) or the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth)
        • Are a director of a registered charity, however the organisation type is not registered with ASIC to operate in Australia
        • Are an officer of an unincorporated association, cooperative or incorporated association that was established under state or territory legislation – unless the organisation is also a registered Australian body.

      I am required to obtain a DIN, when do I need it by?
      The timeframe you have to apply for a DIN depends on when you first became a director, and whether you are a director under the Corporations Act 2001 (Cth) or the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth).

      How do I apply for a DIN?
      Director’s are required to personally apply to ASIC for a DIN. Applications can be made:

      You will need to provide the following information during the application process:

        1. Your tax file number (TFN)
        2. Your residential address – this should match what is on record with the ATO
        3. Information to help verify your identity, such as bank account details, super account details, a dividend statement, an ATO notice of assessment, a Centrelink payment summary or an income statement (PAYG payment summary)
        4. Your personal contact details (not those for your company).

      If you intend to apply online, you will need a myGovID. Please note that a myGovID is not the same as a myGov account. If you have a myGovID, you will have an app on your phone that lets you authenticate a login to a number of government online services (which could include your myGov account). To set one up:

        1. Download and install the myGovID app from the Apply App Store or Google Play
        2. Open the app and follow the prompts to enter your full name, date of birth and email address. It’s important to use your personal email address, instead of a shared or work address, as you are essentially setting up a digital identity.
        3. At this point you will have a Basic identity strength – you need to increase this to Standard identity strength to be able to use your myGovID to apply for a DIN. Follow the prompts to verify at least two of the following identity documents, to increase your identity strength:
            1. Driver’s license or learner permit
            2. Passport (if it has expired within the last three years, that is okay)
            3. Birth certificate
            4. Visa (using your foreign passport)
            5. Citizenship certificate
            6. ImmiCard
            7. Medicare Card
        4. You should now have Standard identity strength, the minimum required to be able to apply for a DIN online.

      Once ASIC has verified your director’s identity, they will issue a DIN.

      I have a DIN, what next?
      Once you have a DIN, you need to provide it to the record holder of your company or Aboriginal and Torres Strait Islander corporation. If you are director of multiple entities, or become a director of another entity in future, you will need to ensure that the DIN is provided to the record holders of those entities.

      If your name, role or address changes, you need to notify your company record holder within seven days. They are then responsible for notifying ASIC of the change.

      What if I don’t register?
      There are civil and criminal penalties for breaching DIN requirements such as failing to apply for a DIN within the specified period or if directed by the registrar, applying for multiple DINs and/or misrepresenting a DIN.

If you have any questions we would be happy to discuss this with you – call us on 03 5339 3200 or contact us here.

Thanks for reading.

The information contained on this website has been provided as general advice only.  The contents have been prepared without taking account of your personal objectives, financial situation or needs.  You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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