As part of a number of initiatives of the Commonwealth Government to deter and penalise corporate phoenix activity, the requirement for company directors to have a Director Identification Number (DIN) is a further step closer with the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 being assented to on 22 June 2020.

The new requirements will commence once the Minister establishes the relevant Commonwealth body to be the Registrar.

Phoenixing occurs when the controllers of a company deliberately avoid paying the company's liabilities by winding up the company and transferring its assets to another company. The Commonwealth Government estimates the cost of phoenixing to the Australian economy to be between $2.9 billion and $5.1 billion annually.

The new requirements will require all Australian company directors, including foreign directors and alternate directors to obtain and hold a DIN. The DIN will require the director to verify their identity on application, with the person then keeping that unique identifier permanently, even if they cease to be a director. It will be an offence for a person to knowingly apply for more than one DIN.

This will provide traceability of a director's relationships across companies, tracking of directors of failed companies and will prevent the use of fictitious identities. By doing so, regulators and liquidators will be assisted in investigating a director's involvement in repeated failed companies and potentially unlawful activity.

Once the new requirements commence, a person appointed as a director must apply for a DIN (and confirm their identify) before they are appointed as a director, unless the period is extended by the regulations or unless they are provided with an exemption or extension by the Registrar.

There will be transitional provisions for existing directors. They will have the period specified by the Minister to apply for a DIN (which is yet to be specified). In addition, during the first 12 months of the commencement of the new requirements, a person who is appointed as a director will have an additional 28 days to apply for a DIN (so that they must apply for a DIN within 28 days of being appointed as a director), allowing time for directors to become familiar with the new regime.

In the meantime, directors should continue to monitor ASIC's website for further updates as to the appointment of the Registrar and locate their identity documents, so that they are ready to apply within time once the new requirements commence.

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