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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. 

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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.

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