The Government has announced the Modernising Business Registers (MBR) Program will support businesses in an evolving digital economy. MBR Program aims to unify the Australian Business Register (ABR) and 31 registered administered but Australian Securities and Investment Commission (ASIC), on a modern digital registry system. This includes the registers for companies, business names, Australian Business Numbers (ABN) and others.
The MBR Program will include the introduction of Director Identification Number (DIN or Director ID) – a perpetual unique identifier.
Director Identification number
The Treasury Laws Amendments (Registries Modernisation and Other Measures) Bill Act 2019 received royal assent on 12 June 2020. Introducing a requirement for all Australia directors to obtain and hold a unique Director ID issued and administered by the Australian Securities and Investment Commission (ASIC).
This requirement was introduced to combat and deter corporate phoenix activity.
What is Phoenix Activity?
Phoenixing is the illegal process where the directors/officers of a company wind up the company and transfer the company’s assets to another company to avoid paying off the company’s liabilities.
The Commonwealth Government estimated the cost of phoenixing to the Australian economy to be between $2.9 billion and $5.1 billion annually.
Director ID is intended to deter phoenix activity by providing greater traceability of director relationships across all Australian companies, particularly in relation to directors of failed companies, and to counter the usage of fictional identities. It also seeks to counter the practice of directors using variations in name spelling or DOBs to make searches across the various registers more difficult.
Key Points
- Director ID are expected to be in the first half 2021, key details are still being worked through
- This reform offers an opportunity to remove sensitive personal director information from public registers
- Significant penalties will apply to any director who fails to hold and DIN or seek to circumvent the regime.
- There will be a transition period of 12 month during which;
- existing directors will need to register within the period prescribed on the announcement; and
- new directors will need to register within 28 days of their appointment
- Applicants will be required to provide specific personal information as well as undergo a 100-point identity verification with ASIC.
- Foreign and alternative directors are included under this regime.