Director identification number

The Australian Government has introduced a new requirement for directors to apply for a unique Director Identification Number (Director ID) from November 2021. Director IDs are part of a package of reforms to address illegal phoenix activity. The Australian Business Registry Services (ABRS), a newly established function of the Australian Taxation Office (ATO), will deliver this initiative.

Key Points:

• All eligible directors will be required to have a unique Director ID from November 2021.
• Director IDs will help prevent the use of fake director identities and make it easier for regulators to track directors' associations with companies over their careers.
• There is no cost to apply for a Director ID, and directors only need to apply once.
• Penalties will apply for failure to comply with the new requirements.

What Is a Director ID?

A Director ID is a unique identifier that will be issued to all eligible directors. The Director ID will be kept permanently and provide traceability of a director's profile and association with companies over their career. There is no cost to apply for a Director ID, and directors only need to apply once.

Why Are Director IDs Required?

Director IDs will help prevent the use of fake director identities and make it easier for regulators to associate directors with companies. This is important because it will help to: 

• Prevent the use of false or fraudulent director identities.

• Make it easier for external administrators and regulators to trace directors' relationships with companies over time.

• Identify and address director involvement in unlawful activity, such as illegal phoenix activity.

Illegal phoenix activity is when a company is liquidated, wound up, or abandoned to avoid paying its debts, and a new company is started to continue the same business activities without the debt.This can result in employees missing out on wages and entitlements, suppliers being left unpaid, and a competitive disadvantage for other businesses.

Who Needs a Director ID?

You need a Director ID if you are an eligible officer of: 

• A company, a registered Australian body, or a registered foreign company under the Corporations Act 2001

• An Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 

An eligible officer is a person who is appointed as a director or an alternate director who is acting in that capacity. This includes directors of: 

• Companies

• Aboriginal and Torres Strait Islander corporations 

• Corporate trustees (e.g., of self-managed super funds)

• Charities or not-for-profit organisations that are companies or Aboriginal and Torres Strait Islander corporations

• Registered Australian bodies (e.g., incorporated associations registered with ASIC and trading outside their state or territory of incorporation)

• Foreign companies registered with ASIC and carrying on business in Australia You can check if your organisation is registered with ASIC using the ABN Lookup tool. 

Foreign directors living in Australia will be able to apply online if they have a myGovID and an Australian tax file number. Foreign directors who live overseas will need to complete a paper application form and provide certified copies of their identity documents.

Who Doesn't Need a Director ID?   

A Director ID is not required if you are a: 

• Director of an incorporated association (with no Australian Registered Body Number) registered with the Australian Charities and Not-for-profits Commission (ACNC)

• Company secretary but not a director

• Person acting as an external administrator of a company

• Sole trader or partner in a partnership If you were a director in the past, but not since the Director ID was introduced on 4 April 2021, you do not need to apply for one.

When Do I Need to Apply for a Director ID?

The deadline to apply for a Director ID depends on when you became a director: 

• Existing directors as of 31 October 2021 have until 30 November 2022 to apply.

• Directors appointed between 1 November 2021 and 4 April 2022 under the Corporations Act must apply within 28 days of appointment.

• Directors appointed from 5 April 2022 under the Corporations Act must apply before their appointment.

• Existing directors as of 31 October 2022 under the CATSI Act have until 30 November 2023 to apply. 

• Directors appointed from 1 November 2022 under the CATSI Act must apply before their appointment. 

If you intend to become a director within 12 months, you can apply for your Director ID in advance. If you don't become a director within 12 months, the Director ID will lapse, but you can reapply and will receive the same number.

How Do I Apply for a Director ID? 

Directors can apply for their Director ID from 1 November 2021 on the ABRS website. To apply, directors will need a myGovID, which is different from a MyGov account used to access services like the ATO or Medicare. Directors must apply for their own Director ID, as there are proof of identity requirements that cannot be completed on an individual's behalf, including by authorised agents. However, agents can assist their clients in understanding the new requirements and provide support on how and when to apply. 

What Happens After I Get My Director ID?

When you receive your Director ID, you need to provide it to the record-holder of any companies you are a director of, such as the company secretary or another director. You will also need to provide your Director ID to any companies you are appointed to in the future. There is currently no requirement to provide your Director ID to ASIC unless requested. In the future, when ASIC's companies register is transferred to the ABRS, a person's Director ID will need to be linked to the companies they are a director of. 

What Are the Penalties for Non-Compliance? 

Civil and criminal penalties will apply where individuals: 

• Fail to apply for a Director ID within the prescribed timeframes or if directed by the regulator

• Intentionally apply for more than one Director ID

• Provide a false Director ID

• Are actively involved in the contravention of any of the above offences 

The ABRS is currently focusing on education and awareness to help directors comply with the new requirements. They are contacting newly appointed directors who have not applied for their Director ID within 28 days to encourage them to apply. If directors fail to act after requests from the Registrar, the ABRS will refer the matter to ASIC for enforcement action. 

Directors, particularly those who live overseas, may need more time to apply. The ABRS is working with directors to help them meet their obligations, with information available on their website about applying for an extension. 

In Summary 

The introduction of Director IDs is a step in preventing the use of false director identities and combating illegal phoenix activity. All eligible directors must apply for their Director ID within the required timeframes to avoid penalties. By understanding and complying with these new requirements, directors can facilitate a more transparent, accountable and trusted business environment in Australia.