What is the Director Identification Number system for a company?

The Director ID regime went into effect on November 1, 2021, after a transitional phase. With the implementation of the regime, the following rules apply:

Existing directors must apply for a Director ID by November 30, 2022; new directors appointed between November 1, 2021, and April 4, 2022 must apply within 28 days of their appointment; and new directors appointed after April 4, 2022 must apply before their appointment.

The table below lists important dates to remember.

A Director Identification Number will be required for all directors, acting alternate directors, and management committee members of ‘registered bodies.’ Companies and registered Australian bodies are examples of registered bodies under the Corporations Act.

1. Go to the ABRS website to access the ABRS Director ID service and learn about the Director ID requirements. Further information is also available on the ASIC website
2. Verify your identity using your myGovID credentials or create a myGovID using your smartphone and Australian identity documents. For more information visit How to set up myGovID.
3. Conduct a proof of record ownership by answering two questions about your individual ATO record.
4. Complete a Director ID application on the ABRS platform to receive the Director ID instantly.

Directors are essential in ensuring that businesses are conducted legally and that they do not participate in activity that harms the Australian economy.

Illegal phoenixing has unfortunately become a prevalent issue in the Australian insolvency industry. The term “phoenixing” refers to a circumstance in which one company goes out of business and is replaced by another founded by the same set of people. One of the most common reasons for doing so is that the previous company is having financial difficulties. Similarly, directors do so by transferring all of the firm’s assets to a new company for a small fee. Finally, the old company is carried on by the new corporation.

Furthermore, the Senate Economics Reference Committee’s 2015 examination into Insolvency in the Australian Construction Industry found that illegal phoenixing was a major issue. The government launched a package of legislation in 2017 to deter and punish illicit phoenixing. The Director Identification Number regime is an example of such a reform.

The existing legislation and technology do not allow for the identification of directors, as evidenced by the following:

• ASIC does not verify the identities of directors and relies on the information provided at face value;
• directors may have several records in ASIC systems. For example, a director may have many unrelated records with minor differences in their name, address, and personal information;
• links between directors and various firms are opaque;
• ASIC and individual directors have little interaction.

The goal of the Director ID system is to limit illegal phoenixing by guaranteeing that the ATO can track directors between companies. Director ID’s are also required for excellent governance and a significant increase in data security.

The requirements must be followed by directors. Non-compliance by directors can result in serious civil and criminal consequences. For example, if a director of a corporation registered under the Corporations Act fails to apply for a Director Identification Number within the required time frame, he or she may be subject to severe legal fines. Other serious civil and criminal consequences are linked to behaviors that undermine the regime, such as falsifying identifying documents.

What is the procedure for keeping track of the company’s directors?
To modernize Australian corporate registries, the Australian government has implemented a new tracking system called the Director ID. As a result, a director will be able to utilize this number for each directorship they have across several businesses.

What is the purpose of the Director ID?
ASIC did not check the identities of directors prior to this regime. Similarly, there was a lack of transparency in the director-multiple-company interactions. ASIC systems may also contain several entries for directors. The new corporate director tracking system increases data security and encourages good governance.

I’m the CEO of a corporation. Is it required of me to follow the new tracking system?
A Director ID will be required for all directors, acting alternate directors, and management committee members of ‘registered bodies.’ In addition, directors who fail to comply will face severe legal and criminal consequences.

The Director Identification Number (Director ID) regime will now provide better openness and security for both directors and people who engage with organizations. As a result of this:

• there will be more trust in the company’s register and its accuracy;
• both director and company data will be stored together, increasing the accuracy and usefulness of the data;
• ASIC will identify which companies a director is linked to and changes to directorships over time, increasing transparency;
• there will be more flexibility and an integrated user experience, with both authorised directors and companies able to interact with the system.