New ASIC Requirements Directors can expect in 2021

Government action to address transparency issues for consumers has resulted in two major changes facing company directors this year. 

Improving the accountability of resigning directors 

Last year, Parliament enacted the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (the Phoenixing Act), which staggered the introduction of certain legislative changes aimed at preventing company directors from making ‘creditor-defeating’ dispositions.  

In February 2021, the last of these changes came into effect. Directors of proprietary companies are now prevented from resigning in circumstances where doing-so would leave the company with no remaining directors. A resolution of the members to remove the last remaining director is similarly voided in those circumstances.1 

The last remaining director may resign or be removed if the members have resolved to wind the company up and filed the necessary forms with ASIC. If you are confused about what this process looks like, read our article here. There are other exceptions for deceased directors and those who never consented to their appointment. 

Importantly, the ‘effective date’ of resignation or removal is now the date you lodge Form 370 with ASIC notifying of the director’s departure. This prevents directors from ‘backdating’ their departure to avoid liability for subsequent events. 

If you are considering a members voluntary liquidation or need advice about an involuntary liquidation or restructuring call us on 1300 654 590. 

Director Identification Numbers (DIN) 

The Director Identification Number (DIN) program has been in the works for some time, with major progress occurring in June 2020 with the passing of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (the Registries Act). A DIN will be a permanent unique identifier for each person who consents to be a director. The purpose of a DIN is to provide transparency into the conduct of a director across companies and will prevent the use of fictitious identities. 

At this stage, the relevant part of the Registries Act will come into effect once the Treasurer appoints a Registrar. Unless an earlier date is fixed by Proclamation, we expect the DIN rules to come into effect on 22 June 2022. The major provisions are as follows: 

  • A director of a registered Australian or foreign company must apply for a DIN within 28 days of their appointment (different conditions apply for directors appointed prior to June 2021 and 12 months after June 2021). 
  • A director may not knowingly apply for more than one DIN or misrepresent to another company, Commonwealth body, or registered body their DIN. 
  • Failure to comply with these provisions may be punishable as criminal or civil offences. 

We will be sure to update you once those changes go into effect. 

If you need guidance to understand your obligations as a director of a company, give us a call on 1300 654 590.  

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