All Directors to have ONE Director Identification Number!


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All Directors to have ONE Director Identification Number!

Directors of a company play an important role and are expected to exercise care, skill, and diligence to protect shareholders, whilst acting in accordance with the company’s constitution.

Although the majority of directors aim to do the right thing, many don’t, either because they are unaware of their full responsibilities, or they feel that their position entitles them to do what they like.  Then some directors purposely set out to cause confusion by changing their name or their date of birth slightly.

This has made finding directors and linking them to multiple companies an ongoing issue for the ATO, ASIC, and liquidators.

The government has sought to address this with the introduction of a Director Identification Number (DIN).  It has now been confirmed by a legislative instrument that all existing directors must apply for a DIN by 30 November 2022.

Applications are free and open next month (November 2021) on the newly established Australian Business Registry Services (ABRS).  This single platform registry administered by the Commissioner of Taxation brings together ASIC’s 21 business registers and the Australian Business Register.

This will also apply to:

  • New directors appointed between              =         Will have 28 days after appointment to
    1 November 2021 and 4 April 2022                        apply for their DIN
  • Directors appointed after 5 April 2022       =          Will need to have a DIN prior to appointment

Penalties will apply: 

Directors who fail to obtain their DIN within these specified timeframes can face both criminal and civil penalties, which could be as high as $1.1m.  Conduct that undermines the new requirements such as providing false identity information or applying for multiple DIN’s will also be penalised.

How does it work: 

A DIN will be specific to a person and will be for a lifetime.  Even if a person is a director of 2-3 companies, they will only ever need one DIN.

Directors will need to apply online and be required to file certain forms electronically.  They will also be required to produce their myGov ID and two other identity documents from a list, including bank statements, ATO notice of assessment, PAYG summary, etc.

Benefits: 

It is anticipated that this initiative will have many benefits, including:

  1. help in locating directors and accessing their background & other information;
  2. help in reducing corporate crime such as illegal phoenixing;
  3. help in identifying false identities, which can be helpful for investors or shareholders looking to appoint new directors.

Still a lot of uncertainty: 

It is presently unclear what happens to companies with directors who do not comply and get a DIN.

  • Will they be able to continue to trade or will they be deregistered or wound up?
  • What will happen to advisors such as accountants and lawyers who continue to provide services such as accounting, BAS returns, and legal services for companies without fully compliant directors?
  • They will be on notice that the directors running the company do not have a DIN, but will they be expected to take any action such as reporting these directors? Or not act for a non-compliant company?

I guess, as they say, the devil is in the detail!

The best way forward is to ensure all your clients are aware of their DIN obligations and that you encourage them to comply, whilst also making them aware of the hefty penalties of not complying.

Should you wish to talk to us about DIN’s or any other matter, please contact Riad Tayeh on 02 9633 3333 or mail@dvtgroup.com.au.

dVT Group is a business advisory firm that specialises in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal).