Director Identification Numbers – action required for all company directors

Background

From November 2021, directors of Australian companies will need to verify their identity as part of a new director identification number (DIN) requirement. The DIN is a unique identifier that each director will be required to apply for once and keep forever via the Australian Business Registry Services (ABRS) website. Directors will keep their DIN regardless of whether they become a director of another company, cease to be a director, change their name or move interstate or overseas.

Applications open from November 2021 with stiff penalties if current and new directors fail to register in time.

The ATO will be responsible for administering the ABRS, including DINs, as part of the Commonwealth’s Modernising Business Registers program.  While initially, this will be as a delegate of ASIC (the current registrar for companies, directors and company secretaries) the ATO will later assume sole responsibility for DINs.

What is a director ID number (DIN)?

A DIN is a 15-digit identifier given to a director, or someone who intends to become a director, who has verified their identity with the ABRS. Each DIN:

• will start with 036, which is the 3-digit country code for Australia under International Standard ISO 3166; and
• end with an 11-digit number and one ‘check’ digit for error detection.

Directors need to apply for their own DIN and they will only ever have one, which they will keep forever.

A director’s DIN will be used to trace their relationships to companies over time.  One of the goals of the ABRS and DIN regime is to overcome issues with the existing register maintained by ASIC under which a director’s identity did not need to be verified and individuals could register under multiple names and details.  This made it difficult for ASIC and others to trace an individual’s conduct as a director, particularly in respect to phoenix activity.

Who needs a DIN?

A DIN is required if an individual is:

• a director; or
• an alternate director who is acting in that capacity,

of:

• a company, a registered Australian body or a registered foreign company under the Corporations Act 2001 (Corporations Act); or
• an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

A person who expects to become an eligible officer within 12 months may apply for a DIN (if they do not already hold one). Once registered, that person has 12 months to be appointed as an eligible officer or their DIN will be made inactive.

How do directors apply for a DIN?

Australian directors

From November 2021, Australian and Australian resident directors can apply for a DIN through the Australian Business Registry Services website. Applicants will need:

• a myGovID with a standard or strong identity strength.Note, a myGovID is not a myGov account;
• their tax file number;
• their residential address as held by the ATO; and
• answers to two questions based on details the ATO knows about the individual (for example, bank account details, an ATO notice of assessment, superannuation account details, a dividend statement, a Centrelink payment summary or a PAYG payment summary).

A myGovID can be obtained by following the instructions available at www.mygovid.gov.au/set-up.

Overseas directors and others who cannot obtain a myGovID

In addition to the information requested on the online form set out above, directors residing outside of Australia or who cannot otherwise obtain a myGovID will need to provide certified copies of one primary identity document (for example, a foreign or Australian birth certificate or passport) and one secondary identity document (for example, a national photo identification card or foreign government identification) to support their application for a DIN.

This can be done either by phone or through completing and posting a paper based form.  For more information on the documents and certifications required for non-myGovID applicants, please see the ABRS website here.

When do directors need to apply for a DIN?

Applications for a DIN can commence from November 2021.  Both existing and new directors will need to apply in accordance with the following dates.  If you are a director of a Corporations Act incorporated company, when you must apply for your DIN depends on the date you become a director.

If an individual cannot apply by the date required, they can apply for an extension, details of which are expected to be released in November 2021.

When do directors need to use their DIN?

Directors need to provide their DIN to their current companies’ record-holders, which can be the company secretary, another director or an authorised agent of the relevant company.

If appointed as a director of any other companies in the future, directors will also need to give their DIN to the people responsible for maintaining the records of those companies.

Directors must also inform the Registrar of any changes to the information attached to their ID.

Failure to hold a DIN

Failing to hold a DIN may result in an infringement notice or possible civil and/or criminal prosecution. The maximum penalties are 60 penalty units ($13,320 at the current penalty unit rate of $222) and one year imprisonment. Certain offences may also be applied against those involved in a contravention, which could include the director’s advisers.

Additional breaches include if a director:

• fails to comply with a direction from the Registrar;
• applies for multiple DINs (unless directed to do so by the Registrar);
• provides a false ID;
• misrepresents their ID; or
• provides false or misleading information to a Commonwealth body, company, registered Australian body or Aboriginal and Torres Strait Islander corporation.

How companies can get ready

Australian companies should be aware of the incoming compliance requirements outlined above.

We recommend companies begin informing their directors of their obligations and encouraging them to start collating their personal identification documents so that applications can be submitted in a timely manner.  This is particularly important for overseas directors whose documents could take additional time, particularly in COVID-19 impacted jurisdictions.

We also suggest encouraging directors to apply for a myGovID (if they do not have one already) now in preparation for submitting their application for a DIN.

Companies and those responsible for maintaining company records should update their processes for director appointments, including asking new directors to obtain and supply their DIN as part of their appointment process, e.g. as part of an incoming director’s consent to act or conflicts declaration.

For more information

If you require more information about the ABRS, DINs and how it impacts yourself as a director or your business, please contact Sean Coleman.