It’s time to check who in your family is a director of a company and make sure they are ready to register for a Director Identification Number (DIN). Don’t forget those voluntary, unpaid director roles on not-for-profit organisations, and Company Title Buildings. You all need a DIN.
In June 2020, legislation was introduced as part of the Government’s ‘Modernising Business Registers Program’ requiring directors of a company (as well as a registered Australian body, ASIC-registered foreign company, or ATSI corporation) to have a DIN. From November 2021, the newly formed Australian Business Registry Services (ABRS) is ready to start taking applications from directors and ‘prospective’ directors.
Why has all of this come about?
Have you ever tried to search for the details of a director on the ASIC database? If you have, you probably know the answer to this question already. It’s a mess! The same person can have ‘multiple identities‘ on the database.
Each time someone spells your name differently, or includes or excludes your middle name, or uses an initial rather than your full name, or enters a different address, or put a ‘0’ in a number for your date of birth, the old system would create a ‘new’ identity. We have seen people with up to 10 different identities. We suspect the ATO thinks this was a deliberate scam by taxpayers to set themselves up to ‘phoenix’ their company down the track. But as people who have been responsible for incorporating over 3,000 companies during the past 20 years, we can honestly say that most errors result from innocent administrative actions by accountants and lawyers, rather than naughty citizens.
That all said, as the Joker would say: ‘This [system] needs an enema!‘, and we are generally in support of this sensible administrative measure.
What are Director Identification Numbers?
A DIN is a 15-digit identifier given to a current or prospective director upon application to the ABRS. Once issued, a director will retain their DIN for life, regardless of whether they cease being a director, are a director for many organisations, change companies, cease to act, change their name, or move interstate or overseas. Put simply, you’re stuck with it for life!
DINs are designed to improve the transparency and accountability of directors and promote good corporate conduct. DINs allow the tracing of a director’s company relationships, making it harder for ‘bad actors’ to engage in unlawful activities such as phoenixing, where a company is wound up or abandoned to avoid paying its debts, and a new company is created to continue its business without the debt.
Who needs a DIN?
You will need a DIN if you’re an ‘eligible officer’ of a company or of a registered Australian body, ASIC-registered foreign company, or ATSI corporation. An eligible officer is a director or an alternate director who is acting in that capacity. If you are planning on becoming a director, you can apply before you are appointed. Company secretaries do not need a DIN.
When do you need to register?
The DIN application timelines are as follows:
- Existing company directors appointed on or before 31 October 2021 will need to apply by 30 November 2022;
- New company directors appointed between 1 November 2021 and April 2022 will need to apply within 28 days of appointment; and
- New company directors appointed from 5 April 2022 will need to apply before they are appointed.
How can you get ready to register?
You can register either by phone, using paper forms, or online with the ABRS. You may already have gone through the torture of setting up myGovID and this is where it comes in handy. When you log into ABRS, myGovID will assist you to prove your identity. You’ll also need some supporting documentation (i.e. your Tax File Number etc.) to assist the Australian Taxation Office in verifying your identity. (You may be wondering what the ATO has to do with this! Yes, we suspect that this is all their idea in the first place.) You must apply directly – no one can apply on your behalf.
It should go without saying that a director must not:
- Knowingly apply for additional or multiple DINs;
- Misrepresent a DIN to a Government or registered body; or
- Provide false or misleading information to ABRS to obtain a DIN.
What happens once you register?
Once registered, you need to pass your DIN onto your company(ies) record-holder. This information must be securely stored by the company and handled in accordance with its legal obligations. At this stage, DINs will not be publicly searchable. So the Government will know everything about you, but your fellow citizens will still be in the dark. (That doesn’t make sense to us, but it is typical of how the Government(s) are treating the whole privacy issue these days…)
In the future, you’ll be able to log in to ABRS to update your details and monitor actions in progress and past activities. Please note, you still need to meet your Corporations Act obligations and let your company know about any changes in name, role, or address.
Meeting Director ID Obligations
It is mandatory for directors to ensure they apply for and are issued a DIN within the mandated timeframes. If you do not comply, ASIC will be responsible for enforcement, with the possibility of both civil and criminal penalties.
More information about how to apply for a DIN is available here.
How we can help
Unfortunately, this responsibility is on you! We can’t apply for a DIN on your behalf. That said, we are a phone call away on 1300 654 590 and available by email. We can answer any questions you have about being a director, including if you are affected by these changes.