Company Directors in Rush to Obtain the ID to Get Safe From $13,000 Fine in Bid to Stop ‘Dummy Directors’

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The new rules require all company directors to have a valid photo ID. This is aimed at cracking down on so-called “dummy directors”, often used to hide the real identity of the people behind a company.

Andrew Barnden, a liquidator, explained, “Dummy directors allow companies to be placed into liquidation owing a significant amount of debts [and then] allow new companies to be incorporated, with the [original] business assets transferred.” 

However, some directors are scrambling to get their hands on the necessary ID before the deadline, with some facing fines of up to $13,000 if they do not comply.

Under the new rules, directors will need to provide either a passport, driver’s licence or other forms of photo ID when registering a company or making changes to its director details.

Those who don’t have a valid form of ID can apply for a “director identification number” from the Australian Securities and Investments Commission (ASIC).

However, this will only be available to those who can prove their identity to the satisfaction of ASIC.

The changes have been introduced as part of the federal government’s crackdown on corporate tax avoidance and money laundering.

They are also designed to make it harder for fugitive criminals to hide behind companies and directorships.

ASIC has warned that directors who don’t comply with the new rules could face civil penalties of up to $12,600, while companies could be fined $126,000.

“Probably about 5 to 10 per cent of companies that we come across have some form of phoenix activity — or misappropriation of assets or [are] breaching the law,” Mr Barnden said.

ASIC will issue Director Identification Numbers and has set up a dedicated website to help directors comply with the new rules.

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