The controversial new Director Identification Number – part of a raft of proposals to crack down on phoenix activity – should be extended to company secretaries as well, it has been claimed.
The idea was put forward by the Governance Institute in its submission responding to the federal government’s Modernising Business Registers Program Consultation Paper.
“Governance Institute has long advocated for, and welcomes, the introduction of Director Identification Numbers (DINs). These numbers will be a unique identifier which a person will keep for life and will enable better tracking of directors of failed companies and prevent the use of fictitious identities,” acting chief executive Meegan George said.
“The advantages of using the DIN to deter and penalise illegal phoenix activity intersects neatly with the advantages that it can provide to address the privacy and security concerns of office holders who currently have their address, date and place of birth data publicly available on business registers.
“Similar to directors, company secretaries are office holders required by the Corporations Act to provide their personal details to ASIC and we consider that the DIN regime should extend to them.”
The institute also demanded that the personal details of all office holders, be removed from the public domain, given the ease with which such information is used for nefarious purposes.
It said personal details already available on the register include residential addresses, birth dates and place of birth, but that having these publicly available “serves no useful purpose other than for persons with criminal intent”.
“We believe that while it is appropriate that ASIC request and retain the personal details of all office holders on a database, such data should not be available on the public register. The public register should display the office holder name, DIN and an address for service to enable legal papers to be served upon them,” Ms George said.
Ms George’s comments fly in the face of intense criticism of the ID system by those whom it affects most: business leaders.
When the plan was first introduced last September by then Revenue and Financial Services Minister Kelly O’Dwyer, angry business leaders lamented why new forms of identification are necessary given the sheer volume of information already available and used by regulators.
“How is it that a non-government entity such as Today Tonight can successfully track down these pheonix [sic] operators yet ASIC with access to substantial information from existing government databases has had such difficulty in the past?” one My Business reader lamented.
“ASIC already have access to MyGov, ABN, ACN, company and personnel TFN , AUSTRAC database, GPRS database of valid addresses, the Federal Government Document Verification Service for confirming the validity of all drivers licences, birth certificates, passports, citizenship documents, etc.”
Similarly, when an accountant told My Business’ sister publication Accountants Daily earlier this month that “the DIN should be good in preventing the number of players” engaging in phoenix activity, several My Business readers reiterated previous concerns at the introduction of yet another piece of red tape.
“What a load of crock… Failure to use existing laws by one or more of the above agencies is the problem, not the lack of connection between directors and their companies,” said one.
“ASIC was asleep at the wheel during the whole banking and insurance fiasco despite having all the details and power they needed. We need government agencies to do the roles they are paid to do and not create more needless red tape and costs for small business,” replied another, in reference to criticism of ASIC at the banking royal commission, such as the revelation it heavily discounted penalties it issued to CBA and even allowed it to draft the press release on the issue.
Not everyone has been against the new ID, though.
“This is a welcomed step in the right direction but it is well overdue and not enough. Now please add some educational requirements of corporate duties and responsibilities as a prerequisite to registration plus a mandatory insurance bond to cover negligence and unpaid debts,” one reader said.
“Please don’t stop at this small step Kelly O’Dwyer. Keep the momentum and put in place a full reform to hold a corporate office and protect the public so damage caused by poor directors can be repaid to the victims without costly litigation. Penalties are a deterrent but don’t recompense the victims or restore the damage caused.”
Ms O’Dwyer has previously defended criticism of the DIN scheme, saying the government is committed to its rollout.
“Current identifier numbers, such as the ACN or ABN, identify an entity rather than an office holder of the entity, and would not therefore assist with identifying individuals involved in illegal phoenixing,” she told My Business.
“Similarly, TFNs are used to track interactions between individuals and the ATO in relation to taxation matters.”
- Opinion: Why do so many claim to represent small businesses?
By Adam Zuchetti
- Opinion: House prices not all doom and gloom
By Adam Zuchetti
- Analysis: How can SMEs realistically stay competitive?
By Adam Zuchetti