The consequences of not having a Director Identification Number (DIN) when setting up a company
Why are director ID’s important?
Unique and individual identifiers, Director Identifications aim to combat ‘phoenixing’, which involves transferring the assets of an indebted company to a new company with the goal being to avoid paying the indebted company’s liabilities deliberately. This act is illegal because it places unsecured creditors and employees in a position where they may not be able to recover money owed by the company.
It is believed that Director Identification Numbers will better equip regulators and external administrators to track failed companies’ directors and increase corporate sector accountability.
Who needs a director ID?
New directors must apply for a Director Identification Number at least a day before registering the company. For those who were existing company directors before 5th April 2022, this needs to be put into place as it became a legally mandatory requirement of company directors. However, once applied for, that Director Identification number is their’s for their entire lifetime as a director.
What happens if I don’t have a Director Identification Number (DIN)?
Any director (or alternate director) who fails to comply with the new rules surrounding Director Identification Numbers may be liable for civil and criminal penalties. A contravention of the Director Identification Number rules occurs, among other things, where a director:
- Fails to obtain a DIN;
- Fails to apply for a DIN within the required time frame; or
- Provides false or misleading statements.
If a director is caught contravening these rules, penalties will be enforced as these are strict liability offences.
More serious criminal or civil liabilities may arise if a director applies for multiple Director Identification Numbers, provides false or misleading information in their application, or misrepresents their Director Identification Number to a Commonwealth body, registered body or company. These offences carry significant civil and criminal penalties, including terms of imprisonment.
| Offence | Maximum penalties for individuals |
| Failure to have a director ID when required to do so | $13,200 (criminal); $1,100,000 (civil) |
| Failure to apply for a director ID when directed by the Registrar | $13,200 (criminal); $1,100,000 (civil) |
| Applying for multiple director IDs | $26,640, 1 year imprisonment or both (criminal); $1,100,000 (civil) |
| Misrepresenting director ID | $26,640, 1 year imprisonment or both (criminal); $1,100,000 (civil) |
What do I need to do?
As a company director, it is your responsibility to have a Director Identification Number or to apply for one.
When people must apply for their Director ID depends on when they first become a director:
- Directors appointed before the 1st of November 2021 have until the 14th of November 2022 to apply.
- New directors appointed for the first time between the 1st of November 2021 and the 4th of April 2022 had 28 days from their appointment to apply.
- From the 5th of April 2022, intending new directors must apply before being appointed to the company, or before the company is registered. If you require more information about your requirements as a director, you can speak with us.
