Director identification numbers proposed to detect phoenix companies

  All company directors should have a personal identification number linking their past and present directorships to help stamp out harmful phoenix activity, according to researchers from the University of Melbourne Law School. The researchers say phoenix activity - where directors intentionally shut down their companies after shifting their assets to new companies to defraud taxation authorities, trade creditors and employees - costs the Australian economy more than $1 billion a year. A three-year investigation by researchers at the University of Melbourne Law School and Monash Business School has made 25 recommendations on how to clamp down on unscrupulous directors. 'It is hard to believe, but at the moment it is more difficult to obtain a driver's license or a bank account than it is to become a company director - there are no identity or background checks,' said University of Melbourne corporate law expert Professor Helen Anderson, who led the study. 'The situation is causing terrible pain. Not only are small traders and consumers suffering significant financial damage as debts are not repaid and deposits are lost, but as a law-abiding tax payer myself the cost in unpaid taxes drives me crazy,' she says.  'Dodgy directors are going under the radar where the regulators can't join the dots.' The researchers also recommend that the regulator, the Australian Securities and Investment Commission, allow free-of-charge searches of company databases. 'Phoenix isn't a problem that we can enforce our way out of.