01.11.2021  Director Identification Numbers – modernising business registers

Director Identification Numbers – modernising business registers

From today, directors and any person intending to become a director of an Australian company  need to apply for a director identification number (DIN). This number is unique to each individual and will remain with a person, even if they cease to be a director.

Overview

DINs are being phased in over 18 months. Any director appointed on or before 31 October 2021 has until 30 November 2022 to apply for a DIN. Any director appointed from today until 4 April 2022, will need to apply for a DIN within 28 days of signing their consent to act as a director. And any director appointed from 5 April 2022 will need to apply for a DIN prior to being appointed as a director.

For verification reasons directors will need to apply for their own DIN; no one else can apply on their behalf.

Implications

Currently, a director must provide a company with their full name, residential address, date of birth, place of birth and any former names prior to their appointment as a director. These details are also recorded on and are publicly available via the ASIC register, although ASIC has not historically verified these details.

The primary purpose of the introduction of DINs is to provide better traceability of a director’s involvement across companies, allowing directors of failed companies to be more readily tracked and reducing the potential use of fictitious identities.

DINs are also intended to have efficiency benefits although we can see timing and logistical challenges in M&A and foreign inbound investment contexts where incoming directors do not already hold a DIN due to the verification requirements. It will be important that DIN applications are made well in advance of closing, particularly for proposed directors that do not hold Australian identity documents.

It is important that directors are aware of their obligation to apply for a DIN within the relevant timeframe as a failure to do so may result in civil or criminal penalties.

Looking forward

The introduction of DINs is just the first of many steps designed to modernise business registers in Australia. Eventually over 30 ASIC registers and the current Australian Business Register will be combined into a single system.

WB welcomes all changes that have the effect of modernising corporate law in Australia. If you have any questions on DINs, please don’t hesitate to reach out to us. For those with Australian identity documents, the director ID application is available at abrs.gov.au. Please keep in mind that overseas based directors will need to apply using a paper-based application, which should be factored into deal timetables where applicable.