The Federal Government has introduced a new requirement for all company directors, or people who intend on becoming a director of a company.
Commencing from November 2021, all directors of a company must have a Director Identification Number, also known as a ‘Director ID’, which is a unique 15-digit number identifier that is attached to that person permanently, similar to a Tax a File Number.
This initiative will be delivered by the Australian Business Registry Services and is aimed at addressing illegal phoenix activity by creating a profile for directors that allows for tracing of their footsteps to observe their association with various companies over the course of time.
Illegal phoenix activity is a situation where the same director creates a new company to carry on the business of an existing company that has been liquidated in order for the existing company to avoid having to pay any outstanding debts owed by the existing liquidated company to its creditors, hence the reference to the bird in Greek mythology that is born again and rises from the ashes.
Do you need a Director ID?
You will need to apply for and have a Director ID if you are either a director, an alternate director, or intend on becoming a director of any company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Island corporation.
When do you need to apply for a Director ID?
When you need to apply for a Director ID depends on when you become, or will become, a director.
1. If you were a director before 31 October 2021, you have until 30 November 2022 to
apply for a Director ID.
2. If you became a director between 1 November 2021 and 4 April 2022, you must
apply for a Director ID within 28 days of your appointment as director.
3. If you became, or will become, a director after 5 April 2022, you must have a
Director ID before your appointment as director.
4. If you are an existing director of an Aboriginal and Torres Strait Islander
corporation, you will have until 30 November 2023. However, from 1 November
2022, you must have a Director ID before your appointment as a director of an
Aboriginal and Torres Strait Islander corporation.
5. If you are a director of a charity registered with the Australian Charities and not-
for-profits Commission and do not fall into any of the above, then you are not
required to obtain a Director ID.
If you need an extension of time, you will need to request an extension by completing the ‘Application for an extension of time to apply for a director ID’ form, which can be found on the Australian Business Registry Services’ website.
How do you apply for a Director ID?
There are three methods to making an application for a Director ID.
The first method will require you to have ‘myGovID’, which is a software application that is downloadable to a smart device and helps to prove who you are so that you can securely log in to a range of government online services. Through the myGovID application, directors can access the Australian Business Registry Services portal to make their application for a Director ID by following the prompted steps. As part of the application, directors will need to provide their personal information including their tax file number, residential address and information contained in two documents, including bank account details, notice of assessments, superannuation account details, dividend statements, Centrelink payment summary and PAYG payment summary.
The second method is directed at circumstances where a director may not have access to myGovID; but is residing in Australia. The director will need to telephone Australian Business Registry Services and make the application over the telephone by answering questions in relation to personal information.
In the event that that the director does not reside in Australia, the third method involves having to make a paper application by completing an ‘Application for a director identification number’ form attaching the supporting information and documentation. This form can be obtained online via the Australian Business Registry Service website.
There are no costs for obtaining a Director ID; it is free.
Penalties
There are civil and criminal penalties for a director failing to have a Director ID when required to do so, failing to apply for a Director ID when directed to do so, applying for additional Director ID’s and misrepresenting their Director ID.
The maximum penalties include fines of up to $1,110,000 and or a one year term of imprisonment.
Conclusion
If you are unsure if you are required to apply for or hold a Director ID, or if you receive a penalty for not having a Director ID which you disagree with, please do not hesitate to contact our office and we discuss how we can assist you.
Vincent Chong, Solicitor
and Matthew Mangiapane, Paralegal
Gramelis Attorneys