In response to a recommendation by the Productivity Commission, last year the Commonwealth passed the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 designed to centralise Australian business registers.
The Act introduces a requirement for all current and future directors of Australian corporations to apply, and permanently hold their own unique director identification number (director ID). Under this legislation, each person who holds the position of director for an Australian or registered foreign corporation, will be required to confirm their identity by obtaining a personal director ID, which they will use for all director appointments. These requirements therefore extend to any director of a trustee company as well as directors of corporate entities.
When to apply for a director ID
The director ID application will be available from November 2021, with transitional arrangements for existing and new directors. When you need to apply for a director ID will depend on when you become a director, as set out below.
|Date person becomes a director||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|
How to apply for a director ID
To apply for your director ID you will need to set up a myGovID account which you will use to verify your identify at https://www.mygovid.gov.au/set-up
Once you’ve verified your identity, you need to apply for a director ID via the ABRS website from November 2021.
This process must be done by the director.
Once you have obtained a director ID, you will be required to register this against any existing director appointments. It will be retained permanently by you, similar to the way a tax file number is applied to each individual.
The benefits of the director ID
The Act is designed to increase director accountability and traceability, substantially limiting the potential for fraudulent activity and ‘phoenixing’ (where directors of a company wind up a company to avoid paying its liabilities and incorporate a new company to carry on substantially the same business). It will also prevent the use of fictitious identities.
The regime is expected to have other benefits such as increasing the accessibility of important information that may assist administrators and liquidators. It is anticipated that the public will be able to search the registry and view a director’s profile, including any historic relationships with different companies.
A further benefit will be that sensitive personal director information held on publicly accessible corporate registers will no longer be available. By removing this information, directors’ private information will be better protected from identity theft and privacy breaches.
While the transitional provisions will be in place for the first twelve months of operation, criminal and civil penalties will apply for directors who do not apply for a director ID within the allowed time. Until the appointment of the Registrar to the Commonwealth Business Registry, ASIC will remain the corporate regulator.
If you have any further questions regarding your directorship or the director ID, please contact your Pitcher Partners representative.