The Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) came into effect on 22 June 2020. The amendment to both the Corporations Act 2001 (Cth) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) will now require all company directors to apply for a Director Identification Number (Director ID) and verify their identity with the Australian Business Registry Services (ABRS).
What is a Director ID?
A Director ID is a unique 15-digit identification number issued by the ABRS.
All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will be required to apply for the unique identifier and verify their identity with ABRS.
Why is it necessary?
The establishment of the Director ID scheme forms part of the government’s digital business plan to facilitate economic recovery. As such, verifying the identities of directors through the ABRS is an effort to:
- reduce the use of false or fraudulent identities;
- provide ease for external administrators to trace a director’s corporate history;
- provide information regarding whether a director has participated in transactions where there was a conflict of interest;
- identify and prevent any director involvement in unlawful activity; and
- promote good governance and data security.
When must directors apply?
As of 1 November 2021, all directors will need to apply for a Director ID as follows:
- Existing directors must apply by 30 November 2022.
- Directors appointed between 1 November 2021 and 4 April 2022 must apply within 28 days of their appointment.
- Individuals intending to be directors from 5 April 2022 must apply before being appointed.
Failing to apply for a Director ID
Directors will be deemed to have breached the Corporations Act 2001 (Cth) if they:
- fail to comply with the directions of the ABRS;
- apply for multiple Director ID’s;
- misrepresent their Director ID; or
- provide false or misleading information and/or Director ID’s.
Further to the above, directors who fail to comply or hold a Director ID may be subject to civil and/or criminal penalties up to a maximum of $13,320.00 and/or 1 year imprisonment.
Overall, the introduction of the Director ID scheme is aimed to reduce the use of false and/or fraudulent identities and to improve the tracing of a director’s corporate history. As such, it would be prudent for a director to be aware of the new legal requirements implemented in the Corporations Act 2001 (Cth) and to be proactive in ensuring their compliance with these changes. If you would like to discuss this article or your circumstances and obligations under the Corporations Act 2001, you are invited to contact the team at Long Saad Woodbridge Lawyers.
Important Disclaimer: The content of this article is general in nature and for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.