Directors on notice: have a DIN or face the consequences

27 June 2024

Introduction

The Australian Securities and Investments Commission (ASIC) has recently brought its first prosecution action against a director for failing to have a director identification number (DIN).

The director was charged with one count of contravening section 1272C(1) of the Corporations Act 2001 (Cth) (the Act) and is facing a maximum penalty of 60 penalty units, being $13,320.

What is a DIN?

In June 2020, the Australian Government introduced the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth). Part of the measures in this legislation introduced a new regime to the Act, which required all company directors, or anyone who intends to become a director, to obtain a DIN.

A DIN is a unique 15-digit identifier given to a director, or someone who intends to become a director that, once issued, will be kept by the individual permanently.

The phase in process for the introduction of DINs occurred over a period of time, however by now all directors of companies governed by either the Act or the Corporations (Aboriginal and Torres Straight Islander) Act 2006 (Cth) should have a DIN.

See HWL Ebsworth’s earlier article here for further details on DINs, including the purpose for implementing this regime.

What does ASIC’s recent action mean for franchisors and franchisees?

Sometimes, franchisors and franchisees become so involved in the world of franchising that the fact that they are still corporations operating within Australia’s corporate laws, is overlooked.

However, ASIC’s recent action provides a timely reminder that directors of all corporations, including all franchisors and franchisees that are companies, need to ensure they have a valid DIN.

While the process for obtaining a DIN is a relatively straight forward administrative process, it is possible that some directors may not have been aware of, or simply missed, this obligation. If that is you, you should act now to obtain a DIN and minimise the likelihood that you will be ASIC’s next action.

If you need any advice about the application of DINs, or the process to obtain a DIN, please reach out to one of our team members.

This article was written by Allison McLeod, Partner and Simon Winiarski, Law Graduate.

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