Required action for Directors – Director Identification Number regime goes live on 1 November 2021

Introduction

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 Part 9.1A of the Corporations Act 2001 (Cth), which requires all company directors, or anyone who intends to become a director, to obtain a Director Identification Number (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.

With approximately 2.7 million companies on the Australian Company Register, more than two million directors are likely to be transitioned on to the new system.

The Australian Business Registry Services (ABRS) is responsible for the implementation and administration of DINs. ASIC is responsible for the enforcement of associated offences.

What is the purpose

These amendments form part of the Australian Government’s Digital Business Plan via the implementation of the Modernising Business Registers Program. Through the ABRS, this program will bring together the Australian Business Register with over 30 ASIC registers.

The DIN is the first service to be delivered by ABRS and aims to create a single source of trusted and accessible business data in order to:

• prevent the use of false or fraudulent director identities;
• make it easier for external administrators and regulators to trace directors’ relationships with companies over time; and
• identify and eliminate director involvement in unlawful activity such as phoenixing activities.

However, preventing fraud is not the only reason for DINs. The original legislation noted the scheme is also meant to protect the privacy of directors by allowing them to be identified on public registers without disclosing information that is currently accessible, such as dates of birth and residential addresses. This is particularly important with the ever increasing risks of cyber security and identity theft, although it is currently unclear whether this will be immediately adopted by ASIC.

When applications must be made

If a person became a director or an alternate director of a company or other registered Australian body (such as an incorporated association registered with ASIC and which trades outside of the state of registration or a foreign company registered with ASIC) which is governed by the Corporations Act 2001 (Cth):

If a person became a director or an alternate director of a company which is governed by the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth):

How to apply

DINs must be applied for personally. There is no cost to apply.

Australian resident directors

For Australian resident directors, the fastest way to obtain a DIN is to apply online on the ABRS website from 1 November 2021.

This will require a myGovID account (which is different from a standard myGov account). myGovID is an app you download to a smart device that allows you to prove who you are and log in to a range of government online services, including myGov.

Should a person not wish to download the myGovID app then they can also apply by phone or via paper form, noting that they will need to provide identification details when applying.

To apply for a DIN a person will need to provide the following required documentation to verify your identify:

• tax file number (TFN);
• residential address as held by the Australian Taxation Office; and
• information from two documents to verify their identity (eg Australian passport, drivers licence, birth certificate).

Foreign resident directors

Foreign resident directors will also have to obtain DINs within the same timeframes. Foreign resident directors who have Australian documentation may still be able to apply as per the above options.

To complete the online application, the foreign director will need to lodge a paper application and provide:

• a certified copy of one primary document, such as a foreign birth certificate, foreign passport; and
• a certified copy of one secondary document, such as a national photo ID, driver’s license.

The following people are authorised to certify the identity documents outside Australia are:

• notary publics; and
• staff at an Australian embassy, high commission or consulate, including consulates headed by Austrade honorary consuls.

The certifier must, in the presence of the foreign director, certify that each copy is a true and correct copy of the original document. This involves:

• sighting the original document;
• stamping, signing and annotating the copy of the identity document to state, ‘I have sighted the original document and certify this to be a true and correct copy of the original document sighted’;
• initialling each page; and
• listing their name, date of certification, phone number and position.

This is likely to be a time-consuming process. We recommend that foreign resident directors commence this process as soon as possible.

Managing your DIN

Notification

Once a DIN has been obtained, it must be passed on to the relevant company, ASIC registered entity or Aboriginal and Torres Strait Islander corporation for whom the director acts. Additionally from 5 April 2022, a director will be required to provide their DIN before appointment (or 1 November 2022 for Aboriginal and Torres Strait Islander corporations).

At this stage, it is unclear whether, when or how companies need to provide DINs to ASIC.

Updating information

If a director’s personal information changes, they can update their DIN online at the ABRS site. Directors must also notify their companies within seven days of such a change (or within 14 days if a director of an Aboriginal and Torres Strait Island corporation). A company must then notify ASIC of the change within 28 days of the change to avoid late fees.

Privacy

A DIN confirms a director’s identity and will, in future, show which companies that director is linked to. It is not governed by the same rules or laws that apply to a TFN.

An authorised agent or company secretary must ensure that information about a company and its officeholders is:

• handled according to their legal obligations; and
• securely stored.

For now, a DIN will not be searchable by the public. The ABRS is not authorised to disclose DINs to the public without the director’s consent. The ABRS and ASIC will consult the community about what details can be disclosed and searched in the future.

Compliance

Failure to meet obligations or causing an offence in relation to a DIN may incur an infringement notice leading to potential civil penalties (up to 5,000 penalty units, currently $1.11 million) and/or criminal charges (up to 12 months imprisonment). Offences include applying for multiple DINs and using false information in an application.

Useful Links

Further information can be found at the myGovID website and the ABRS website.

Whilst we cannot make the application on a director’s behalf, please do not hesitate to speak with a member of our corporate governance team should you have any further queries.

This article was written by Sam Dwyer, Partner and Sam Bongiorno, Law Graduate.