24 June 2020
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Legislation to consolidate national business registers and to introduce Director Identification Numbers (DIN) was passed by the Parliament last week. Together, the Commonwealth Registers Bill 2019 and the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 are part of a legislative package to modernise and simplify the business registration framework into a “mega-registry” made up of over 30 different registries, and represent a continuation of the anti-phoenixing measures.
The registry changes will include the registries for companies, business names, business numbers and others, with the Australian Business Register to operate the new system (under the auspices of the Australian Tax Office), with a view to reducing fraud and introducing greater automation in compliance.
DINs are expected to be rolled out within two years, and will require new and existing directors to verify their identity in order to be issued a permanent DIN which they will retain even if they cease to be a director. Once introduced, individuals will require a DIN in order to be appointed. It will act as a unique identifier that traces each directors’ professional profile, officorial postions and corporate relationships over time. It is hoped the introduction of DINs will reduce fraud and fictious appointments and frustrate phoenixing activities, where company controllers shutdown an existing entity and transfer its assets to a new company as a means to avoid debts and liabilities, often at a significant cost to its creditors and employees.
The new legislation creates a strict liability offence for any director who does not have a DIN. However, the Act states that there will be transitional provisions in place for all directors appointed prior to the instatement of the Registrar. This will avoid automatic breaches of the Act for any existing directors who do not have a DIN on the day of the Registrar’s appointment. These transitional provisions have not yet been specified by the Minister.
The new legislation also makes exception for any individual appointed as director within the first 12 months after the instatement of the Registrar. These officers must apply for a DIN within 28 days of their appointment as director.
The bills received assent on 22 June 2020. You can read more about the changes in our previous articles here and here.
Authors: Georgia Milne & Catherine O'Connor
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The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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