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Director ID Number a Good Idea If Personal Safety Protected

Director ID Number a Good Idea If Personal Safety Protected

3 July 2017

Chapman Tripp supports the introduction of a personalised Director Identification Number (DIN), subject to the proviso that directors can choose not to have their residential address made public.

This is the substance of the firm’s submission on the discussion document issued by the Ministry of Business, Innovation and Employment (MBIE), says Chapman Tripp partner Roger Wallis.

“A DIN would fulfil some useful functions. For example, it would help:

• people searching the Companies Office to better identify who they are looking for, particularly when there are two or more directors with the same name, or with similar names and small differences in spelling

• maintain multiple records efficiently, and

• provide stronger protections against “phoenix companies”. Under the Companies Act, it is sometimes possible in the event of a liquidation for the failed company’s promoters to transfer out the assets into a new company, give it a similar name and then trade on with the same board. A DIN would make that more obvious, and should raise a red flag for potential investors.

“But the DIN should be enacted alongside an option which would allow directors to provide a contact address where papers can be served, which is separate to their home”, Wallis said.

“Directors can become targets of disgruntled shareholders, employees, competitors and/or interest groups. They have the right to ensure that their families are protected.

“MBIE acknowledges that the imposition of a DIN will intrude on a director’s privacy. In this context, we consider that residential addresses should be filed with the Companies Office but not made public, as already applies to birth dates which must be provided but are not searchable.

“Because these safety concerns have been raised with MBIE, MBIE’s present intention is to shelve the address issue for a further, separate consultation next year.

“We see no logic in that approach. It is imperative that both matters are dealt with at the same time because one is integral to the other,” Wallis said.


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