What is a Director ID?
The new Director ID is a unique 15-digit identification number issued to company directors to help verify the identity of company directors. The scheme is being implemented in an effort to prevent fraudulent and false director identities, to make it easier for administrators to trace individuals relationships with companies over time and to eliminate illegal phoenix activity whereby company is wound up and a new company is started carrying on the same business in an effort to avoid debt.
Application for a Director ID is mandatory and free. A Director ID is required if you are already a director or intended to be a director of an organisation that is registered under the Corporations Act 2001 or the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (‘CATSI’). This includes being a director of a: –
- Company
- Aboriginal and Torres Strait Islander Corporation
- Corporate trustee (i.e. of a self-managed super fund)
- Charity or not-for-profit organisation that is registered as a company
- Registered Australian body (i.e. incorporated associations with ASIC that trade outside of the state of incorporation)
- Foreign Company registered with ASIC carrying on business in Australia
Importantly, no one can apply for your Director ID on your behalf. You must apply for your own Director ID as you are the only one who can verify your own identity. This is similar to how you are the only one who can apply for a Tax-file number
Once applied for, the Director ID is yours for life. There Is no need to apply for a new number in the event that you change companies, change your name, cease being a director, change states or leave the country.
There are however some people that do not need a Director ID that may otherwise think they need to apply. You do not need a Director ID if you are:
- A company secretary, but not a director
- Acting as an external administrator of a company
- Running a business as a sole trader or partnership
- Referred to ‘director’ in your job title, however are not appointed as a director under the Corporations Act or CATSI
- Director of a registered charity with an organisation type that is not registered with ASIC or ORIC to operate throughout Australia
- An officer of an unincorporated association, cooperative or incorporated association established under state or territory legislation, unless the organisation is also a registered Australian Body.
When must you apply for a Director ID by?
Depending on when you became, or when you become a director, the date on which you must comply with the new requirements changes. Another factor that changes the date which you must comply by is what Act you are incorporated under.
Corporations Act
If you became a director on or before 31 October 2021, you are required to apply for a Director ID by 30 November 2022. This date is applicable to you even if you become a director of another company after 31 October 2021.
If you became/ become a director between 01 November 2021 and 04 April 2022, you are required to apply for a Director ID within 28 days of appointment.
If you become a director from 05 April 2022, you are required to apply for a Director ID before appointment.
Corporations (Aboriginal and Torres Strait Islander) Act
If you became a director on or before 31 October 2021, you are required to apply for a Director ID by 30 November 2023.
If you become a director from 01 November 2022, you are required to apply for a Director ID before appointment.
It is a criminal offence to not apply for a Director ID on time in accordance with the relevant parameters that apply to you. Extensions can be applied for if you cannot apply by the date required.
How to apply for a Director ID?
The application process outlined by the Australian Business Registry Service is a 3-step process. More information can be found on their website https://www.abrs.gov.au/director-identification-number/apply-director-identification-number
What this means for companies moving forward
It may be beneficial for companies which these requirements apply to consider implementing policies and procedures as a part of their director nomination and election processes. This will assist to ensure that both the company and the directors they appoint are compliant.
If you need any assistance with corporate governance and the new director identification requirements, please contact Robertson Hyetts experienced commercial law team on 03 5434 6666 in Bendigo or 03 5472 1588 in Castlemaine.
