Directors ID Deadline fast approaching - 30th November 2022
Anybody that is a director of a company is now required to have a Directors ID (ID). This is a new legal obligation for directors to get an ID if they are a director of a company. Directors only need to do this once and it is a free process. Primarily it is part of a digital service rollout and modernizing business registers. The first service they are launching is the Directors ID.
The Directors ID is a 15 digit number. This ID will be used to track the directors relationship over time with companies. This will mean a person that identifies themselves as a director can be linked to companies. Part of the purpose of the ID will be to help prevent the use of fictitious people being appointed as directors and also help regulators look for illegal behavior with companies.
Who needs a Directors ID?
The Directors ID is required for ALL directors. It is not obligated for persons other than directors for example company secretaries are not required to register for Directors ID.
Newly appointed directors from 1st of November 2022 needed to have Directors ID before they set up the company. From 5th April 2023 directors are required to get their ID prior to the appointment of the company.
Additional time frames for Aboriginal and Torrest Srait Islanders to apply for Directors ID.
Why do you need to get a Directors ID?
Government cracking down on phoenix activities of Directors. Business does work for a company and don’t get paid. Director ID is seen as a way to prevent illegal phoenix activities and see that a particular person is involved in companies that have gone into liquidation and has unpaid debts and obligations. The ID makes it much harder to hide.
Also prevents false director appointments. There have been instances where people have been appointed as directors with false identities. Critical way for the government to follow up on this and prevent fictitious appointments. For example if someone seeks to appoint someone as a director and they don’t have a directors ID, the government is following up the directors. This is identifying companies where the director has not consented to become a director. The hope is for the Director ID process will bring this to the light and identify false appointments.
How to apply for a Directors ID?
Most people can apply online which leverages the myGovID app. There is a distinction between mygov account and myGovID. MyGovID is an app for a smart phone and smart device which contains in it a proof of identity component to get a credential. This forms the first step in applying for the directors ID. In regard to myGovID service - obtaining a standard strength will be enough, but the strong credential will allow users a smoother online experience.
To apply online go to https://www.abrs.gov.au/director-identification-number/apply-director-identification-number
The process should take no longer than 10 to 12 mins. This ID is given straight away and does need to be treated securely. It can and should be shared with your Accountant.
There is help available for people that don’t have an internet connection or a smart phone. Directors can call and apply over the phone 13 62 50 for a Director ID. This task needs to be done by the director and you can’t get someone else to do this.
What happens after I've applied for my Directors ID
No other changes currently exist. When the ASIC register transfers to the Australian Business Registry Services (ABRS) in a few years there will be further changes.
What happens if people don’t apply on time?
ABRS is taking a supportive approach to help people to get their Director ID. They are following up directors to meet their obligations. The intent of Director ID is to take firmer action and may take further action against directors engaging in legal behavior. Currently some Self Managed Superannuation Fund (SMSF) members may not realise they will have to get a Director ID if they have a company linked to the SMSF.
There are firm penalties for directors that don’t get a Directors ID and will be followed up by ASIC. There are criminal penalties that can be enforced by ASIC.
