Under changes to the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) introduced in June 2021, all directors will be required to verify their identity as part of a new Director Identification Number (director ID) requirement.
From 1 November 2021, directors of Australian corporations (and alternate directors) can apply for a unique director ID issued and administered by the Australian Taxation Office (ATO).
The director ID will permanently remain with that director across all current and future directorships once obtained.
The new regime is part of a suite of new legislation passed which is aimed at combating illegal phoenixing activity and preventing directors from registering under different or fictitious names to escape liability.
The regime is part of the Federal government’s Modernising Business Registers program aimed at consolidating the Australian Business Register and 31 existing registers administered by the Australian Securities and Investments Commission into one business register, which will be maintained by Australian Business Registry Services (ARBS).
Who needs a director ID?
You will need a director ID if you’re an eligible officer of:
- a company, a registered Australian body or a registered foreign company under the Corporations Act 2001 (Corporations Act)
- an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
An eligible officer is a person who is appointed as:
- a director
- an alternate director who is acting in that capacity.
All directors must apply for their director ID themselves as they will be required to verify their identity. No one can apply on their behalf.
A director ID needs to be provided to the record-holder of the company, which may be the company secretary or another authorised agent of the company.
If you are appointed as a director of other companies in the future, your director ID must be similarly provided for each new position.
It is crucial that directors also inform the ATO of any changes to their personal information as attached to their director ID. This can be achieved by logging in to ARBS online to update your details.
When do directors need to apply?
Corporations Act directors
Directors can apply for their director ID from 1 November 2021. If you are planning on becoming a director in the next 12 months, you can apply before you are appointed.
The last date to register for a director ID depends on the date you become a director.
|Date you become a director||Date you must apply|
|On or before 31 October 2021||By 30 November 2022|
|Between 1 November 2021 and 4 April 2022||Within 28 days of appointment|
|From 5 April 2022||Before appointment|
CATSI Act directors
When you must apply for your director ID depends on the date you become a director.
|Date you become a director||Date you must apply|
|On or before 31 October 2022||By 30 November 2022|
|From 1 November 2022||Before appointment|
How do directors apply for director IDs?
The method of applying for a director ID depends on the residency of the director.
Australian resident directors are encouraged to download the MyGovID app and verify their identity by providing their personal information. This enables the director to complete their application online via the ARBS website.
Foreign residents will be required to complete the paper form application (that is yet to be released) and provide certified copies of the prescribed identity documents.
What happens if a director fails to comply?
If a director fails to hold a director ID, it may result in an infringement notice or the possibility of civil and/or criminal prosecution. Penalties can include one year of imprisonment and 60 penalty units, which equals $13,320 at the current penalty unit rate of $222. A court may declare a contravention of a relevant civil penalty provision and seek a pecuniary penalty order the greater of A$1,110,000 (5,000 penalty units) or three times the value of the benefit derived or detriment avoided because of the contravention. Offences may also be applied against those involved in an infringement, including the eligible officer’s advisers.
Additional contraventions include if a director:
- fails to comply with directions from the Registrar
- makes multiple applications for director IDs
- provides false ID
- misrepresents their ID
- provides false or misleading information
How can we help?
If you would like to discuss director IDs further and how it relates to you or your company, please contact our Corporate & Commercial team.
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