Company directors will be required to sign up to a new identification scheme designed to stop illegal phoenixing activity under new laws introduced by the Federal Government.
The director identification numbers (DIN) have been designed to help regulators detect, deter and disrupt phoenixing activity by tracking directors beyond individual businesses through a database of unique numbers.
The database will be administered through a new registry regime, which will merge ASIC’s companies register with the Australian Business Register.
Illegal phoenixing is a form of wage theft
Illegal phoenixing is where a director transfers assets to a new business and then liquidates the old company before starting to trade the new business.
It is a form of wage theft, because workers who are owed unpaid wages and accrued entitlements like leave and superannuation by the old business have no way of recovering what they are owed.
Under the proposed changes, new company directors registered under the Corporations Act must apply for an identification number within 28 days of becoming a director.
Existing directors will have 15 months to apply for the scheme from the date of the scheme starting.
There will be civil and criminal penalties for directors who fail to apply for identification numbers, while regulators may also issue infringement notices to those who fail to comply.
A move in the right direction
“This is definitely a move in the right direction,” said Miles Heffernan from Employer Advisors.
“Currently, false information given to regulators about the name and date of birth of a director, which makes it almost impossible for ASIC to track down and prosecute offenders.”
It’s expected that a DIN registration will cost between $20 and $40.
If your business is having trouble with compliance, or if you are planning to performance manage a difficult employee, we can help. Please call our team at Employer Advisors today on 1300 853 837.
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