Reading time: 6 minutes

A company director is responsible for managing the business affairs of, and owes various fiduciary duties to, their appointed company. To modernise Australian business registers, the Australian government has introduced a new company director tracking system, the Director Identification Number (DIN). Once the Australian Taxation Office (ATO) confirms a person’s identity, they will receive a unique DIN. Importantly, directors keep this number permanently. As a result, a director will be able to use this number across multiple companies for each directorship they hold. 

The DIN has received strong support from the Australian Securities and Investment Commission (ASIC). They believe it will significantly benefit regulators and individuals doing business. Additionally, it will help provide greater security and modernise the way director information is collected. This article will explain how the company director tracking system works in Australia.

Individuals who are currently a director or will be acting as a director in the future must apply for a DIN. The Australian Business Registry Services (ABRS) will be responsible for introducing and maintaining the DIN regime. 

The DIN Regime

The DIN regime has commenced with a transitional period applying from 1 November 2021. Notably, with the commencement of the DIN regime, the following applies: 

  • existing directors will need to apply for a DIN by 30 November 2022; 
  • new directors appointed between 1 November 2021 and 4 April 2022 will be required to apply within 28 days of their appointment; and 
  • new directors appointed from 5 April 2022 will need to apply for a DIN before their appointment. 

The table below outlines key dates you should note.

Act Date person becomes a director Must apply
Corporations Act 2001
  1. On or before 31 October 2021
  2. Between 1 November 2021 and 4 April 2022
  3. From 5 April 2022
  1. By 30 November 2022
  2. Within 28 days of appointment as director
  3. Before appointment
Corporations (Aboriginal and Torres Strait Islander) Act 2006
  1. On or before 31 October 2022
  2. From 1 November 2022
  1. By 30 November 2023
  2. Before appointment

All directors, acting alternate directors and management committee members of ‘registered bodies’ will require a DIN. Registered bodies include companies and registered Australian bodies under the Corporations Act.

To apply for a DIN, visit the ABRS website

Why is the DIN Necessary?

Directors play a crucial role in ensuring that companies are run legally and do not engage in conduct that will damage the Australian economy. 

Unfortunately, illegal phoenixing has become a widespread problem in the Australian insolvency space. Phoenixing describes the situation where one company disappears, and the same group of people start another company in its place. A typical reason for doing so is usually because the old company is in financial difficulty. Likewise, directors do this by transferring all the company assets to a new company for minimal consideration. Ultimately, they carry on the old company through the new company. 

Additionally, illegal phoenixing activity was a significant issue in the 2015 inquiry into Insolvency in the Australian construction industry by the Senate Economics Reference Committee. To deter and penalise illegal phoenixing, the Government in 2017 announced a package of reforms. One such reform is the DIN regime.

The current legislation and technology do not cater for director identification, noting the following: 

  • ASIC does not verify the identity of directors, and they take the information at face value;
  • directors may have multiple records within ASIC systems. For instance, a director could have multiple unlinked records with slight variations of their name, address and personal details; 
  • there is limited transparency of relationships between directors and multiple companies; and
  • there is little interaction between ASIC and individual directors. 

The DIN regime aims is to reduce illegal phoenixing activity by ensuring that the ATO can properly trace directors between organisations. DINs are also necessary to promote good governance and significantly improve data security.

Compliance With the DIN Regime

Directors must comply with the DIN requirements. Indeed, there are significant civil and criminal penalties for directors who do not comply. For example, if a director of an organisation registered under the Corporations Act fails to apply for a DIN within the applicable time frame, they may face significant civil penalties. Other large civil and criminal penalties are associated with actions that undermine the DIN regime, such as providing false identification documents. 

Directors' Duties Complete Guide

If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.

Download Now

Key Takeaways

The introduction of the DIN regime will now provide greater transparency and security for directors and people interacting with companies alike. As part of this:

  • there will be increased confidence in the company’s register and the accuracy of the company’s register;
  • both director and company data will be stored together, increasing the accuracy and usefulness of the data; 
  • ASIC will identify which companies a director is linked to and changes to directorships over time, increasing transparency; and 
  • there will be flexibility and an integrated user experience with both authorised directors and companies able to interact with the registrar online in a more modern system.

If you are a current or prospective director, ensure both yourself and your advisors keep a close eye on this space. Importantly, you want to be compliant to avoid legal penalties. For more information on the company director tracking system, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

What is the company director tracking system?

The Australian government has introduced a new tracking system, the Director Identification Number to modernise Australian business registers. Accordingly, a director will be able to use this number across multiple companies for each directorship they hold.

Why is the DIN being introduced?

Before the DIN regime, ASIC did not verify the identity of directors. Likewise, there was limited transparency of relationships between directors and multiple companies. Also, directors may have multiple records within ASIC systems. The new company director tracking system promotes good governance and significantly improves data security.

I am a company director. Is it compulsory for me to comply with the new tracking system?

All directors, acting alternate directors and management committee members of ‘registered bodies’ will require a DIN. Further, there will be significant civil and criminal penalties for directors who do not comply.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards