Failing to have a director identification number: ASIC brings first action
The Australian Securities and Investments Commission (ASIC) has taken significant step in enforcing director compliance.
Although the facts of this matter are not public this action acts as a stark reminder that all company directors, including the directors of a special purpose company that acts as the trustees of an SMSF, must have a director ID.
On 19 March 2024, the Downing Centre Local Court saw a director formally charged with contravening section 1272C(1) of the Corporations Act 2001 due to their failure to possess a director ID. An interim non-publication order (NPO) was issued by the Court, preventing the public identification of the defendant. The case is set for further mention before the Downing Centre Local Court on 16 April 2024.
The interim NPO was extended to 16 April 2024 on 22 March 2024, highlighting the ongoing legal proceedings in this matter.
Background on Director ID Requirements
It’s crucial for all directors to comply with legal requirements, including verifying their identity with Australian Business Registry Services to obtain a director ID. The following timelines outline the application deadlines for director IDs:
- Directors appointed before 1 November 2021 were required to apply by 30 November 2022.
- New directors appointed between 1 November 2021 and 4 April 2022 had a 28-day window from their appointment date to apply.
- Since 5 April 2022, new directors must apply for their director ID before being officially appointed.
Penalties for Non-Compliance
The severity of non-compliance is reflected in the maximum penalty for an offence against section 1272C(1) of the Act, which amounts to 60 penalty units. In this specific case, the defendant faces a maximum penalty of $13,320.
Why Compliance Matters
Director IDs play a vital role in maintaining transparency and accountability within corporate governance structures. By ensuring directors have a unique identification number, regulators can track and monitor directorship across various entities, promoting better oversight and adherence to legal standards.
The initiation of ASIC’s first prosecution action underscores the importance of director compliance with regulatory requirements.
It serves as a reminder to all directors and aspiring directors to fulfill their obligations promptly and adhere to legal timelines regarding director ID applications.
Compliance not only avoids legal repercussions but also contributes to a more transparent and trustworthy business environment.
Bruno Palermo, Head of Accounting, Senior Adviser.
Freedom = Football
Bruno says he is very proud that he was born and raised in Hobart. On the weekends he enjoys playing soccer, hitting the gym and enjoying the fun and busyness of raising his two daughters with his wife. He is a passionate Chair of Variety Tasmania. Variety – the Children’s Charity supports kids and families who are facing many challenges through sickness, disadvantage or living with additional needs.
