Hiding Australian directors’ addresses could cause insolvency process problems

The Australian Securities and Investment Commission (ASIC) made the changes in response to concerns about the public availability of directors’ personal information on its business registers, which included the officeholder’s residential address. ASIC has removed these details from current and historical company details available through searches purchased from its website.

Joni Henry, an expert in corporate law at Pinsent Masons, said: “These long sought-after changes were made to protect the privacy and personal safety of directors and other registered officeholders. This information can be readily found and used for potential fraud or doxxing, which then creates a real-world risk of harassment and physical danger.”

“This sensible change brings Australia into line with other jurisdictions. Residential addresses of directors are not publicly available in the UK and New Zealand passed laws late last year to allow directors to have their residential addresses redacted from the publicly searchable Companies Register due to similar safety and privacy concerns,” she said.

“ASIC will still collect personal information from directors, including their address details, and require directors to update their details with ASIC and continue to hold director identification numbers. The Treasury is also proposing draft legislation to strengthen its ability to monitor and enforce compliance with these identification and registration requirements.”

Treasurer Jim Chalmers reportedly intervened to urge the removal of residential addresses from public databases, following advice from the Australian Security Intelligence Agency.

Law enforcement, regulators and government agencies, such as the Australian Taxation Office, can still access residential addresses included on ASIC’s registers.

Hannah Griffiths, an expert in insolvency at Pinsent Masons, said: “These changes will create potential challenges for insolvency practitioners. In the meantime, ASIC has agreed to provide the required information in response to direct requests made by insolvency practitioners on court appointed liquidation.”

“Other appointment types should obtain the relevant information from the directors following discussions. Names of officeholders and other details are still available on the publicly searchable company register,” she said.

“This change will likely pose a very real and practical impediment to the timely administration of a corporate insolvency by insolvency practitioners and also have the undesirable consequence of delaying the pursuit of recovery actions, enforcement of guarantees and identification of assets in corporate insolvency which will likely pose significant, and unintended, commercial risks for businesses, creditors and financiers that have historically relied on ASIC published data in respect of the whereabouts of officeholders.”

“Businesses, creditors and financiers should consider ensuring performance obligations in their contractual arrangements with counterparties to enhance identity verification of officeholders, maintain and update address for service details, and ensure adequate security is obtained at the time of entering credit facilities or trading accounts with corporate entities to insulate against this regulatory change.”