A director identification number (director ID) is compulsory for all directors of a registered Australian body, including a foreign company.
As part of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 anyone 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.
What is a director ID
A director ID is a unique identifier that you need to apply for once and keep permanently. The director ID is similar to an Australian tax file number (TFN) and will help prevent the use of false or fraudulent director identities. This has been specifically introduced as a means of addressing phoenixing arrangements.
A director ID is compulsory for all directors of a registered Australian body, including foreign companies registered with ASIC.
How to apply for a director ID
To apply for your director ID you will need to set up a myID account which you will use to verify your identify at https://www.myid.gov.au/how-set-myid
Once you’ve verified your identity, you need to apply for a director ID via the ABRS website.
This process must be done by the director. Detailed instructions can be found here.
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.
When to apply for a director ID
You must apply for a director ID before you can be appointed as a director
Penalties
Directors who fail to apply within the time frame could face fines of up to 5,000 penalty units. Currently, penalty units are measured at $222 per unit for breaches of Australian Government Law, which means fines of up to $1.1 million may apply. There is also the consequence of possible imprisonment for up to 12 months.
Additionally, further penalties may be imposed on directors who knowingly apply for multiple director IDs, misrepresent their identification numbers to a Government or registered body, or provide false information during their application process.
Directors of a CATSI organisation formed under Corporations (Aboriginal and Torres Strait Islander) Act 2006 can face penalties of up to $200,000. Penalties will also apply for conduct that undermines the new requirements, including providing false identity information to the registrar or intentionally applying for multiple director IDs.
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 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 also has 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 is 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.
If you have any further questions regarding your directorship or the director ID, please contact your Pitcher Partners representative.
