Company directors will be required to apply for a director identification number under changes to the Corporations Act.
The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) was enacted on 22 June 2020 and amends the Corporations Act 2001 (Cth) by implementing a system of director identification numbers (similar to ACN’s for companies).
Under the current system, companies supply personal information about their directors (such as their full name, date of birth, place of birth and residential address) to ASIC when those persons are appointed as directors.
A number of deficiencies have been identified with the current system including:
- ASIC does not vet the information supplied by companies
- although companies are required to have a signed consent to act form from each director, ASIC does not check this either, so a “dummy director” could be unwittingly or dishonestly registered as a director of a company
- the personal information of directors (including their residential addresses) is publicly available on the ASIC register, creating risks in terms of personal safety, identity fraud and privacy
- you cannot search the ASIC register by director name, so it is difficult to make inquiries in respect of “related parties” and potential “conflicts of interest”
To remedy these deficiencies, the director identification number system has been introduced. Amongst other things:
- the new register will be administered by the ATO
- directors will be required to apply for a director identification number within prescribed timeframes (to be specified in due course)
- it is expected that directors will need to submit personal information and identity documents to be verified (it is unclear to what extent personal information will be publicly available)
- further details will be provided in the regulations/legislative instrument
- the director identification number system is expected to commence in mid-2021
Each director identification number will be unique to the individual, and civil and criminal penalties will apply to any director who:
- fails to hold a director identification number or fails to apply for one within the prescribed timeframe
- knowingly provides false or misleading information about their identity to the registrar
- intentionally provides a false director identification number to a company or relevant authority
- knowingly applies for multiple director identification numbers
Directors must ensure they comply with the new regime as significant penalties will apply for breaches.