Introduction
Background
As part of its Digital Business Plan, the government announced the full implementation of the Modernising Business Registers (MBR) program. This program will:
- establish the new Australian Business Registry Services (ABRS)
- streamline how you register, view and maintain your business information with government.
The ABRS will: - Progressively roll out between 2021 and 2024
- Bring together the Australian Business Register (ABR) and more than 30 Australian Securities and Investments Commission (ASIC) registers in one place
- Introduce the Director ID initiative.
The policy intent behind the introduction of the Director ID is to create a fairer business environment by helping prevent the use of false and fraudulent director identities. Additionally, the government expects the Director ID regime to help prevent illegal phoenixing by ensuring directors can be traced across companies. 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, creditors, competitor businesses and the community can be disadvantaged.
The ABRS is responsible for the implementation and administration of Director IDs. ASIC will be responsible for the enforcement of associated offences.
Why does this matter to me?
Bookkeepers and BAS Agents are not typically called upon to advise or assist clients in relation to their ASIC or Corporations Act obligations. These types of services – which go by a number of names, including “corporate admin”, “corporate secretarial” and “company office” – are usually taken care of by the client’s accountant (in their role as the client’s ASIC Registered Agent) or, in some cases, by the client themselves. That said, anecdotally, there are accounts of an increasing number of BAS Agents becoming ASIC Registered Agents.
In any event, it is important for several reasons that bookkeepers and BAS Agents are broadly across the new Director ID regime to:
- Promote general awareness of the Director ID regime with their corporate clients.
- Field basic enquiries from clients and direct them to seek further advice where necessary.
- Obtain a Director ID for their own related entities, such as trading companies or corporate trustees.
What exactly is a Director ID?
A Director ID is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity.
A Director ID:
- 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.
Directors will only ever have one Director ID. They’ll keep it forever even if they: - change companies
- stop being a director
- change their name
- move interstate or overseas.
Who needs a Director ID?
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.
Importantly, it is not only the directors of trading companies that need a Director ID. If you’re a director of a passive investment entity or indeed a corporate trustee (such as of a discretionary trust of a self-managed super fund), you too will need to apply for a Director ID.
Importantly, it is not only the directors of trading companies that need a Director ID. If you’re a director of a passive investment entity or indeed a corporate trustee (such as of a discretionary trust of a self-managed super fund), you too will need to apply for a Director ID.
When you need to apply
You can apply for a director ID now.
If you’re planning on becoming a director, you can apply before you’re appointed.
Corporations Act directors
When you must apply for your director ID depends on the date you become a director.
Date you become a director Date you 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
To be a director under the Corporations Act, you must:
- be an individual who is at least 18 years old
- not be disqualified from managing corporations, unless the appointment is made with the permission of ASIC or the Court.
For more information on the Corporations Act, visit the ASIC website.
CATSI Act directors
When you must apply for your director ID depends on the date you become a director.
Date you become a director Date you must apply
On or before 31 October 2022 By 30 November 2023
From 1 November 2022 Before appointment
Applying for your Director ID
From November 2021, you will need to apply for your Director ID on the ABRS website and log in using the myGovID app. The myGovID app is downloaded on your smart device to verify your digital identity and is different to your existing myGov account.
When applying for your Director ID, you are required to personally make the application so you can verify your identity.
There are varying application deadlines for the new identifier, with current directors (on or before 31 October 2021), having until 30 November 2022 to obtain their Director ID.
While existing directors have plenty of time, if you become a director between 1 November 2021 and 4 April 2022, you must apply for your Director ID within 28 days of your appointment to the board.
Directors appointed after 5 April 2022, must apply prior to taking up their directorship.
If you are unable to apply for your Director ID by the relevant deadline, you can apply for an extension.
Once you receive your new Director ID, you will need to pass it on to your company recordholder who is usually the company secretary or authorised agent. The ABRS is not permitted to disclose Director IDs to the public without consent and your details won’t be searchable on the register.
If you would like more information about Director IDs, whether you need one and how to go about applying, please get in touch.