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Excuse me, do you have ID?

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The government is proposing that directors of charity companies will need to obtain their own unique “Director Identification Number” (DIN), as part of a suite of reforms to combat unscrupulous phoenixing activity and modernise the Australian Business Register and ASIC registers. The introduction of DINs will allow the government and others to trace a director’s relationship across companies, enabling better tracking of directors of failed companies and preventing the use of fictitious identities.

The new DIN system, set out in the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2018, will require directors of:

  • companies registered under the Corporations Act;
  • Australian Registrable Bodies registered under the Corporations Act (commonly these are incorporated associations licenced to operate outside of the state or territory in which they were established); and
  • Indigenous corporations established under the Corporations (Aboriginal and Torres Strait Islander) Act 2006;

to apply to the registrar for a DIN. There are no exceptions for directors of registered charities.

An existing director will have 15 months from the commencement of the laws to apply for a DIN, while new directors will need to apply for a DIN within 28 days of being appointed as a director, including as an alternate director for a short period of time.

If a director fails to apply for a DIN in accordance with the Act they commit a criminal offence punishable by a fine of $12,600, and a civil penalty of up to $200,000.

Interestingly, the new laws also propose to extend liability to any person who is “involved” in a contravention. This could see liability extended to others including other directors, the company secretary, the CEO, and potentially even the company itself if it has been knowingly concerned in the contravention. The civil penalty for a company is a maximum $1 million. It will therefore be crucial for charities to ensure that these new requirements are reflected in their recruitment practices, policies and procedures.

The new laws are currently open for consultation until 26 October 2018. If they are passed, they will commence on a date to be fixed by the government – which is likely to be after some of the other reforms to the registers have been implemented.

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