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On 12 June 2020, the registry modernisation legislation passed to support businesses in an evolving digital economy. This introduces a new Director Identification Number (DIN) regime to prevent the appointment of dishonest directors and also to facilitate traceability of previous company relationships.
As part of the new deregulation agenda, the Modernising Business Registers (MBR) program has announced initiatives to help cut back the red tape and simplify a few key corporate processes.
It’s a rare instance to find a business that hasn’t had its fair share of grievances when it comes to lengthy and confusing Government processes and procedures. Made worse when after all the time and effort, the confirmation documentation returns with a dreaded spelling error! Well, here’s another administration task to add to the list.
The Modernising Business Registers Program
The MBR program aims to consolidate 7.9 million active ABN’s hosted by the Australian Business Register (ABR) with 31 registers managed by the Australian Securities and Investments Commission (ASIC) on one centralized electronic registry platform.
The Australian Taxation Office (ATO) will be responsible for the operation of the merged registry.
The initiative has been designed to:
- help businesses comply with their reporting commitments by streamlining systems and simplifying processes and licensing
- create both process and cost efficiencies
- result in greater integrity of company information
Director Identification Number
As part of the program, a regime has been developed to better track activities and company relationship and appointment history of directors by introducing a permanent individual identifier called a Director Identification Number (DIN).
The DIN will be unique to the individual, not the company, and is a mandatory requirement for company director appointment.
This regime has been introduced to help combat:
- Illegal phoenixing activity. This is when a company deliberately avoids paying its creditors by stripping cash and assets in the entity and transferring the assets to another replica company. This replica company is managed by the same directors. The former indebted company is then liquidated and wound up, leaving creditors, employees and government agencies unpaid.
- Fraudulent director appointments.
- Data discrepancies and inaccuracies between different Government systems.
There will be a transitional 12-month period upon implementation of the regime where individuals appointed as a director have 28 days to apply for their Director Identification Number. Existing directors will be required to register within 18 months.
After this transitional period, a director must apply prior to application of appointment. For companies wanting this appointment to occur swiftly, it will be vital to understand the requirements of the process to ensure deadlines are met.
Intentional misuse or non-compliance by an individual may result in civil and criminal penalties, including removal from the ASIC registry, or even imprisonment.
Introduction of the regime is set for June 2022, unless an earlier release is announced.
For More Information, Contact SRJ Walker Wayland
If you require more information about the MBR program or what the introduction of a Director Identification Number will mean for you, feel free to contact us. We can help you plan out your admin and compliance with the new legislation.