In response to a recommendation by the Productivity Commission in 2020 the Commonwealth Government passed the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 which is designed to centralise Australian business registers.
This Act introduces a new requirement for all current and future directors of Australian corporations to permanently hold their own unique Director Identification Number (“Director ID”).
Under this legislation, each person who holds the position of a director of an Australian or registered foreign corporation will be required to confirm their identity by obtaining a personal Director ID that will be used for all director appointments.
As it applies to all directors of companies, the Directors ID requirement also extends to directors of trustee companies as well as directors of corporate trading entities;
When to Apply for a Director ID
Director ID applications will be available from November 2021. There will be transitional arrangements for existing and new directors and the applications for a Director ID will depend on when you become a director. The application timetable is as follows;
|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 (if not already done) and this will be used to verify your identify. (refer https://www.mygovid.gov.au/set-up)
Once you have verified your identity, you can then apply for a Director ID via the Australian Business Registry Services website (ABRS website) which will be available from 1 November 2021.
Please note, this process must be done by the Director.
Once you have obtained a Director ID, you will then be required to register this ID against any existing director appointments that you hold with ASIC. The Directors ID number will be unique to you and is to be retained as a permanent record by you similar to your tax file number.
The Benefits of the Director ID
The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 ACT is designed to increase director accountability and traceability and aims to substantially limit the potential for fraudulent activity and “phoenixing” (where directors of a company wind up the company to avoid paying its liabilities and then incorporate a new company to carry on substantially the same business). It will also prevent the use of fictitious identities within corporate structures.
The Directors ID is also expected to provide other benefits such as increasing the accessibility of important information that may assist administrators and liquidators. It is also anticipated (however not confirmed at this stage) that the public will be able to search the Registry and view a director’s profile, including any historic relationships with different companies they have been a director of.
A further benefit of this new system will be that sensitive personal director information currently held on publicly accessible corporate registers (via ASIC) will no longer be available to the public, protecting an individual’s privacy. By removing this information from the public domain, a directors’ private information will be better protected from identity theft and privacy breaches. We know from our experience with our clients that this is a real issue and one that is of concern to many company directors.
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 Directors ID within the prescribed time frames as stated above. Until the appointment of a “Registrar” to the Commonwealth Business Registry, ASIC will remain the corporate regulator of this system.