Hey Director! What’s your DIN?
On 12 June 2020 the Federal Government passed the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 (Bill). This Bill establishes a new lifetime registration regime for directors, under which every director is assigned a unique identifier known as a Director Identification Number (DIN) that will remain with that individual for all directorships.
The DIN regime will prevent the use of fictitious identities and provide traceability of a director's relationships across companies. It will also assist regulators and external administrators when investigating illegal phoenixing activities.
Who must register for a DIN?
Every "eligible officer" must have a DIN. An "eligible officer" is a director, alternate director or other officer that may be prescribed by regulation, of a body corporate that is a registered Australian body corporate or registered foreign company (referred to below as a Director).
All current and future Directors will need a DIN. This includes Directors of a corporate trustee of an SMSF or a family discretionary trust.
When to register for a DIN?
The DIN regime is anticipated to be in place in the first half of 2021, and by no later than June 2022. The exact commencement date is still to be announced.
Following commencement, there will be a 12-month transition period during which:
a Director must apply for a DIN within 28 days of appointment, and
existing Directors will be given a grace period to apply for a DIN.
After the transition period ends, a new Director must register for a DIN before being appointed.
Under the DIN regime, each person who consents to being a Director of a company will be required to verify their identity before being assigned a DIN. A person will keep that DIN permanently, even when they cease to be a Director. Only the Registrar will have the power to cancel, change or reissue a DIN.
A person who is not a Director may apply for a DIN if the person intends to become an "eligible officer" within 12 months of applying and does not already have a DIN.
Serious consequences for failing to comply
A person who fails to apply for a DIN as required under the DIN regime, who intentionally provides false information when applying for a DIN or who applies for multiple DINs can be liable for significant civil and criminal penalties.
For an individual, penalties include a monetary penalty up to the greater of $1,050,000 or 3 times the benefit derived or detriment avoided because of the breach.
For a body corporate involved in a breach of the DIN regime, there is a maximum monetary penalty of the greater of $10,500,000, or 3 times the benefit derived or detriment avoided because of the breach, or 10% of the annual turnover of the body corporate up to a maximum of $525 million.
Additionally, a Director who applies for multiple DINs or who misrepresents their DIN may be liable for up to 12 months’ imprisonment.
Moving forward
You should be aware of the practical implications the new DIN regime may pose for your company, for example when appointing a new Director on an urgent basis or appointing a Director who lives overseas. It is important that you prepare your company processes early, to ensure compliance when the DIN regime commences.
We will let you know when the Bill receives assent and the commencement date is confirmed, but in the meantime, please contact our commercial team for more information or to discuss how these changes might impact your company.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
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Simon Griesz
Partner
E swg@bwslawyers.com.au
P 02 9394 1082
Charlotte Galea
Graduate
E cfg@bwslawyers.com.au
P 02 9394 1088