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

22 October 2021

To ensure all directors of a company are who they say they are, starting from November 2021, directors are required to verify their identity with the Australian Business Registry Services (ABRS). Once verified, they will receive a director identification number (director ID) in order to prevent against the use of false or fraudulent director identities.

How it works

A director ID is a 15-digit identifier given to a director, or someone in the process of becoming a director, who has their identity verified by the ABRS. A director ID will look like:

  • 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.

Quick facts:

  • Free to apply

  • Due to strict identity verification procedures, directors must apply for their own director ID. No one else can apply on their behalf

  • Directors will keep their director ID forever, even if they change companies, stop being a director, change their name or move interstate or overseas.

Why?

All directors are required by law to verify their identity with the ABRS 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.

Who?

You 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.

If you are a director of the following, you need a director ID:

  • Company Aboriginal or Torres Strait Islander corporation

  • Corporate trustee e.g., SMSF

  • Charity or not-for-profit organisation that is a company or Aboriginal or Torres Strait Islander corporation

  • Registered Australian body e.g., an incorporated association that is registered with ASIC and trades outside the state or territory in which it is incorporated

  • Foreign company registered with ASIC and carrying on business in Australia (regardless of where the director lives)

Non-Australian directors who have never lived in Australia may find it difficult to meet the identity verification documentation requirements. This may force some foreign companies and Australian subsidiary of foreign companies to rethink their board of directors members.

It is noteworthy to mention that a director ID is not required for person who is a company secretary but not a director or who is referred to as a ‘director’ in their job title but has not been appointed as a director under the Corporations Act or the CATSI Act.

When?

Applications open in November 2021. Applications can be made before a person is appointed as a director.

Date of director appointment

On or before 31 October 2021

Between 1 November 2021 and 4 April 2022

From 5 April 2022

Date of application

By 30 November 2022

Within 28 days of appointment

Before appointment

How?

You will need a standard or strong identity strength myGovID to apply for your director ID online.

If you:

  • Don’t have a myGovID, you can download the app via the Apple Store or Google Play Store

  • Have a myGovID, you don’t need to do anything until November when you can apply for your director ID.

 Penalty

Directors who fail to obtain a DIN within the required timeframes may be issued an infringement notice and could face criminal charges and/or civil penalties of up to 5,000 penalty units (currently $1.11 million).