Directors of an SMSF corporate trustee who fail to obtain a director identification number (DIN) may be forced to step down as a trustee and leave the fund, according to an SMSF specialist adviser.
SMSF Alliance principal David Busoli said the new requirement for directors of a company or corporate trustees – including SMSFs and limited recourse borrowing corporate trustees – to be registered with Australian Business Registry Services was mandatory from 1 November.
“At some stage, where a director refuses to comply, it would be expected that the Australian Securities and Investments Commission would not allow their directorship to continue,” Busoli said.
“Where the company is acting as a trustee for an SMSF, this may cause a breach of the director/member nexus, which would need to be rectified within six months. Such rectification may require the member to leave the fund.”
He noted there were different time periods under which directors had to obtain a DIN, based on when they were first appointed as a director, but this should not be exploited.
“As this is a new process, it would be expected that the regulators will be a little patient, though this should not be relied upon. Notwithstanding the staggered implementation program, we would recommend early registration,” he said.
Directors appointed before 31 October 2021 will have until 30 November 2022 to apply for a DIN, while those appointed between 1 November 2021 and 4 April 2022 must apply for a DIN within four weeks of being appointed as a director.
“From now until 4 April 2022, directors of newly established companies will have 28 days to establish their DIN,” Busoli said.
“This will not affect our process for the establishment of a corporate trustee for an SMSF or for a limited recourse borrowing arrangement, but it will leave the directors subject to ASIC action, including penalties, if they don’t comply with the 28-day deadline.”
All appointments as a director after 5 April 2022 will require a DIN application to have taken place before the appointment is made.
Busoli also highlighted that SMSF advisers cannot apply for a DIN on behalf of clients and SMSF corporate trustees will need to apply personally to fulfil the requirement to verify their identity.
Superannuation, Financial Services and the Digital Economy Minister Jane Hume said 2.7 million company directors will need to apply for the 15-digit DIN, which will stay with a director for life, regardless of how many companies they work with or the roles they hold.
DINs were introduced in mid-2020 as part of changes by the federal government to modernise its business registers program.