Attention all Directors! What do the Consolidated Business Register and Director Identification Numbers mean for you?
The Federal Government has recently published two draft bills that will change (and hopefully simplify) corporate governance in Australia. The bills propose to introduce a single consolidated business register and impose a requirement on all directors to have a unique identifier known as a Director Identification Number (DIN).
Consolidated Business Register
The first draft bill aims to reduce the time that businesses spend complying with corporate administration by creating a user-friendly and streamlined registry service.
Similar to what occurred with MyGov (in which Centrelink, Medicare and ATO services were brought under one roof), the draft bill proposes to consolidate 35 business registers so that they can be administered all in the one place. Such registers include:
- the Australian Business Register;
- ACN Register; and
- the register of disqualified company directors.
Initially, only those registers maintained by ASIC and the Australian Business Register (which is under the purview of the ATO) will be subject to the regime. However, the Government plans on gradually including other business registers after a reasonable trial period has been successfully undertaken.
Director Identification Numbers
In an effort to promote good corporate conduct and combat the prevalence of illegal phoenixing, the second draft bill imposes an obligation on all directors to have a DIN.
The DIN will be a unique identifier assigned to each person who consents to being a director of an Australian company. Each time a person consents to become a director of a company, the unique DIN will need to be provided. As such, the DIN will provide traceability of director’s relationships across companies, enabling better tracking of failed companies and preventing the use of fictitious identities.
ASIC will be tasked with the responsibility of enforcing the DIN requirements through civil penalties and criminal offences (which can be quite severe).
Under the draft bill, a person must apply for a DIN within 28 days of:
- being appointed a director of a company; or
- the Registrar requesting that the person apply for a DIN.
Thankfully, the draft bill includes transitional arrangements for persons who are directors at the time the new requirement starts, providing 15 months to apply for a DIN rather than 28 days.
Following public feedback of the two draft bills, the Government plans on releasing a second tranche of legislation which will merely highlight the remainder of referrals of functions and consequential changes from other Acts.
What does this mean for you?
With the consolidated register, now is the time to check your registrations, compliance and consistency with respect to the registers which are to be consolidated. While the consolidation may streamline services, rest assured that it will also provide further data-matching opportunities for the Government. Reviewing current reporting will help reduce any conflicts which could be identified and audited by the Government.
If you are currently a director of a company, keep an eye out for the changes becoming law and get your DIN sorted as soon as possible. This will avoid any risk of missing the 15 month deadline and facing penalties.
For more information about the changes or to check your registrations please contact your usual Hanrick Curran advisor. Alternatively, contact Tim Taylor, Matthew Beasley, Nathanael Lee, Jamie Towers or Simone Gordon on 07 3218 3900.
Thank you to McInnes Wilson for the article content.
Please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice