In Australia, company directors must apply for a Director ID. Company directors were required to apply for a Director ID by 30 November 2022, otherwise they may face fines of up to AUD 13,000. However, the Australian Business Registry Services (ABRS) has announced a grace period — applying for a Director ID before 14 December 2022 will not attract any penalty. Please do not miss this application deadline!
What is a Director ID?
A Director ID is a permanent unique identifier that belongs to a director personally and must be applied for by every company director. Once the director’s identity is successfully verified, they will be issued a 15-digit identifier. The Director ID will stay with the director for life, even if they change companies, stop serving as a director, change their name, or move overseas.
The Regulator
The Australian Business Registry Services (ABRS) is responsible for administering the Director ID and provides directors with support and guidance to help them understand and meet their obligations as directors.
How to Apply for a Director ID?
You can apply for a Director ID on the ABRS website. You will need to follow the ABRS’s instructions to prepare the relevant identity documents and provide the information above. If you are unable to apply online, you can also apply by telephoning the ABRS. Applying for a Director ID is free of charge.
The Purpose of the Director ID
The Director ID can prevent others from impersonating a director or stealing another person’s director identity. In addition, the Director ID helps the relevant authorities strengthen their oversight, making it easier to trace the relationship between directors and companies, and to identify and eliminate cases of directors engaging in illegal activities.
The Director ID helps to eliminate illegal phoenix activity — this refers to company directors abandoning an old company or transferring the old company’s business to a new company without paying market value, leaving the debts with the old company. Once the assets have been transferred, the old company faces liquidation or is abandoned, and the creditors of the old company cannot be paid.
This kind of conduct not only directly affects creditors, but also impacts society as a whole — the company avoids paying tax, while at the same time the government often has to subsidise the unpaid entitlements of the liquidated company’s employees. Compared with other companies, those engaging in illegal phoenix activity gain an unfair commercial advantage, which is detrimental to fair competition. The Director ID can help the relevant authorities identify this kind of activity and promote fairness in society.
Obligations Relating to the Director ID
In addition to applying for a Director ID on time
Do not apply for more than one Director ID (unless directed to do so by the Registrar)
Do not misrepresent your director identity to a Commonwealth body, a company, an Australian registry body, or an Aboriginal and Torres Strait Islander corporation
Do not engage in conduct that breaches the above director identification obligations.
If You Cannot Apply for a Director ID on Time
You can complete the extension application form on the ABRS website and state your reasons. If the extension is approved, no penalty will apply.
Final Thoughts
The importance of the director role in an Australian company goes without saying — it can be said that the more control you hold over a company, the greater the responsibilities and obligations you bear. Because the responsibilities are so significant, the Australian government uses identity verification to regulate company directors. If you have not yet registered for a Director ID, we urge you to register as soon as possible to avoid penalties. If you have any questions about the application process, or any questions about your role as a director, we recommend that you seek a consultation with our experienced lawyers.
