Director ID Implementation
Mandatory Director Identification
With the implementation of the DirectorIdentification Numbers (DIN’s or Director ID’s) pending, it will be importantto understand the new obligations for those operating in the capacity of aDirector, as failure to apply for a DIN within the required time frame will leave you open to both criminal and civil penalties. It is one of the first initiatives under the Modernising of Business Registers Program and will be a legal requirement. A person only needs to apply once for a Director ID, thereis no need to apply each time you are appointed a Director.
What Does it Mean to have a Director ID?
The Director ID will be a unique identifierthat a Director will keep forever, enabling regulators to better track of Directors of failed companies who use fabricated identities. It will help identify business who are doing the wrong thing. The new system will help overcome issues with data integrity, which have always been a constant battle in regulating phoenixing and the illegal activities around this dilemma. This compliance regulator will further support small businesses by keeping out the operators that are breaking the law.
Phoenixing is when companies deliberatelyavoid paying liabilities by shutting down anindebted company and transferring assets to another company. This hurts tradecreditors, employees, and the public through lost taxes.
The main aim of the Modernising of Business Registers Program is to protect legitimate businesses. To stop directors who areleaving unpaid creditors behind. By identifying those questionable directorsfrom deliberately avoiding their obligations, government departments can be there to support credible businesses. Putting identification on the front end of business means we know who we are dealing with when it comes to trading with a business. There is a legislative provision to deactivate the Director ID if needed.
When does the Application Process Start?
■ New Directors / New Entities
► Doesn’t apply yet, unless youare invited.
► From 1st November 2021: Mustapply within 28 days.
► From 5th April 2022: must applybefore being appointed.
■ Existing Directors /Existing Entities
► Doesn’t apply yet, unless youare invited.
► Must obtain prior to 30thNovember 2022. (transition period)
■ Future Directors
► A person who intends to beappointed, may apply up to 12 months before.
■ Corporations (Aboriginal and Torres Strait Islander Act 2006CASTSI Act) have an extra 12 months. Must applyby 30th November 2023.
■ NFP Sector – working through this at themoment. Information to follow.
Who and Why
When
*Not yet – after 1st November2021
How