Key Points:

• A director identification number (director ID) is a unique identifier you need to apply for once and will keep forever.
• If you’re a director or a corporate trustee of a self-managed super fund (SMSF) you will need to apply for a director ID.
• You can apply for a director ID from November 2021

Full Article:

The director identification number (director ID) is a unique identifier that a director will apply for once and will keep forever. If you’re a director or a corporate trustee of a self-managed super fund (SMSF) you will need to apply for a director ID.

You will be able to apply for a director ID from November 2021 on the new Australian Business Registry Services (ABRS) online and will log in using the myGovID app.

When you must apply for a director ID, depends on the date you became a director. You will need to apply for your director ID yourself to verify your identity. No one can apply for it on your behalf.

The introduction of director ID will create a fairer business environment by helping prevent the use of false and fraudulent director identities. This will go a long way to better identifying and eliminating director involvement in unlawful activity.

Why you need a Director ID

Shareholders, employees, creditors, consumers, external administrators and regulators are entitled to know the names and certain details of the directors of a company.

All directors are required by law to verify their identity with us before receiving a director ID. 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 eliminate 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. A new company is then started to continue the same business activities without the debt. When this happens:

• employees miss out on wages, superannuation and entitlements
• suppliers or sub-contractors are left unpaid
• other businesses are put at a competitive disadvantage
• the community misses out on revenue that could have contributed to community services.

Director Identification Number

All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will need a director identification number (director ID).

A director ID is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity with us.

A director ID:

• starts with 036, which is the 3-digit country code for Australia under International Standard ISO 3166
• ends with an 11-digit number and one ‘check’ digit for error detection.

Directors need to apply for their own director ID. It’s free to apply.

Directors will only ever have one director ID. They’ll keep it forever even if they:

• change companies
• stop being a director
• change their name
• move interstate or overseas.

Who needs to apply and when

If you want to become a director or are already one, you’ll need a director ID. You can apply for a director ID from November 2021.

If you are planning on becoming a director, you can apply before you’re appointed.

Corporations Act Directors

When you must apply for your director ID depends on the date you become/became a director.

To be a director under the Corporations Act, you must:

• be an individual who is at least 18 years old
• not be disqualified from managing corporations, unless the appointment is made with the permission of ASIC or the Court.

For more information on the Corporations Act, visit the ASIC website.

Meeting your Obligations

Your director ID obligations include: 

• applying for a director ID within the relevant timeframe for your situation
• applying for a director ID when directed by the Registrar to do so
• not applying for more than one director ID (unless directed by the Registrar to do so)
• not misrepresenting your director ID to a Commonwealth body, company, registered Australian body or Aboriginal and Torres Strait Islander corporation
• not being involved in a breach of the above director ID obligations.

If you can’t apply by the date you need to, you can apply for an extension. Information on how you can do this will be available here in November.

If you don’t meet your obligations:

• there may be civil or criminal penalties
• you may be issued with an infringement notice

If you have any questions or need advice and clarity specific to your business, feel free to contact Semmens & Co on 03 8320 0320 for a free consultation.