NEW LAWS TO FIGHT PHOENIXING ACTIVITY - DIRECTORS TO GET A ‘DIRECTOR IDENTIFICATION NUMBER’ FOR LIFE

Under the current framework, ASIC does not verify the personal details of corporate officeholders. As a result, many companies are run under false names. This allows rogue company directors to deliberately avoid paying creditors by liquidating the company, transferring its assets to a new company and continue trading.

The Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019 was passed by Parliament on 12 June 2020 and is expected to take effect in the first half of 2021. Schedule 2 of that bill imposes a legal requirement for directors to obtain a unique ‘Director Identification Number’ (DIN). Once assigned to a director, the DIN will be attached to him or her for life. It is envisaged that this will allow regulators to better monitor the activities of directors of failed entities.

The DIN program will be operated by the ATO. Under the transition rules, new directors will have 28 days to obtain a DIN. Current directors will be given 18 months to apply for a DIN and verify their identity. Failure to apply for a DIN within the required timeframe or providing false information will attract civil and criminal penalties.

The new program will also consolidate 31 ASIC business registers, including the companies register and the Australian Business Register. Accordingly, the ability of various government bodies to cross-report will be significantly enhanced.

Contraventions of the new scheme will attract civil and/or criminal penalties ranging from infringement notices to imprisonment. For example, the fraudulent use of a DIN can attract a maximum penalty of 12 months in prison or a $200,000 fine.

Whilst the legislation is likely to impede a rogue director’s ability to engage in fraudulent activity, it will also hand greater investigative power to numerous government agencies.

Takeaways

It is important to make yourself aware of the changing regulatory environment. The government is cracking down on rogue directors and the practice of avoiding corporate debt and tax liabilities. If you are a director and are unsure of the totality of your obligations, contact the team at Axia Litigation Lawyers – because Every Move Matters!

Want to know more?

Contact Axia Litigation Lawyers direct and speak with an expert today.

You might also like

Dealing with a dispute & need expert advice?

Axia Litigation Lawyers are experts in dispute resolution and litigation.

Contact us today to understand how you can effectively and efficiently reach a resolution in your matter.

Adam and staff have been very helpful throughout the whole process. Very happy with the service and final outcome.

Dale G,

The team at Axia Litigation were first class, when guiding us through two consecutive legal matters. We received regular communication, with each of the legal steps explained in full.

Premier Box,

After my initial consultation with Axia Litigation Lawyers, I felt the tension and stress fall away. They were both compassionate and understanding of my case and were diligent and thorough in their work ethic.

Liz W,

Axia were competent, diligent and excellent to work with.

Sharon D,

We have used Axia Legal on two occasions over the last three years with great success and I am happy to recommend Adam Brown from Axia Legal

Cara R,

I have no hesitation in recommending them. They were always very informative and answered all of my questions and always kept me in the loop and well informed of my progress.

Greg P,

Thank you for your outstanding help & I couldn't be happier with the help AXIA have given me.

Steven C,

Axia Lawyers are an excellent litigation firm that handle cases in a professional manner and pay attention to details. The customer service was outstanding, I would highly recommend this firm.

Jodi B,

After multiple attempts at trying to find reliable counsel in Australia to act on an advisory basis to our firm, we found ourselves feeling reassured and feel as though we have gained a solid ally with Axia Litigation.

Portland Maritime,