Reaction has been swift and angry to the prospect of yet more business registration requirements, with one My Business reader suggesting regulators should take lessons from TV current affairs shows to track down lawbreakers.
In response to Minister for Revenue and Financial Services Kelly O’Dwyer’s proposal to implement Director Identification Numbers (DINs) as a means of cracking down on phoenix companies, a number of business owners questioned why federal regulators can’t use the extensive information they already have to catch dodgy operators.
“How is it that a non-government entity such as Today Tonight can successfully track down these phoenix operators yet ASIC, with access to substantial information from existing government databases, has had such difficulty in the past?” asked one reader.
“ASIC already [has] 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 driver’s licences, birth certificates, passports, citizenship documents etc. There already exists the following organisations Auditing and Assurance Standards Board, Australian Accounting Standards Board, Australian Financial Security Authority, Australian Prudential Regulatory Authority, ASIC, Austrac, and The Financial Reporting Council. How much more bureaucracy, overheads and red tape does small business need?”
Another said: “There are many documented instances over the last few years of where ASIC [has] failed to do their duty as a regulator despite taking excessive annual fees from small businesses who have to pay to register themselves every year. Ever contacted ASIC customer service for assistance? Their customer service is appalling!”
Aside from the imposition of yet more paperwork, debate was decidedly mixed on whether such a move would lead to a material reduction in phoenix activity, which no one denies is a costly and frustrating example of business fraud.
“Phoenix companies often rise from the ashes with different directors to the deceased entity – e.g. wife, brother, other relatives. A director DIN won’t do anything to stop the practice,” suggested one reader.
However, not everyone agreed, with another reader calling for much more scrupulous registration processes for directors from the outset:
“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.
“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.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.