New Australian Director ID Requirements – In force from 1 November 2021

Introduction

From 1 November 2021, Directors of various entities registered under the Australian Corporations Act 2001 (Cth) will need to obtain a unique Director ID number. The Director ID’s purpose is to verify the identity of each director. 

The new requirements have important implications for Australian subsidiaries of multinational companies, foreign corporations registered in Australia and for special purpose vehicles that may be established in Australia, such as joint venture companies and acquisition and financing vehicles.

Who is covered by the Director ID requirements?

Directors of the following types of entities are covered by the new requirements:

• Companies incorporated under the Corporations Act
• Australian bodies registered under Division 1 of Part 5B.2 in Chapter 5B of the Act (having an ARBN)
• Foreign corporations registered under Division 2 of Part 5B.2 in Chapter 5B of the Act.

Aboriginal or Torres Strait Islander corporations (registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) are also covered.

The provisions also cover alternate directors when acting as such.

The provisions only cover directors who are actually appointed, and do not cover de facto directors or shadow directors, but the provisions could potentially be expanded to cover them.

Directors of Australian charities registered under the ACNC regime that are not within the above categories are not required to obtain a Director ID.

When is a Director ID required?

For directors appointed before the regime commenced on 1 November 2021 there is a transitional period up to 30 November 2022 to apply for a Director ID.

For directors appointed between 1 November 2021 and 4 April 2022, the Director ID must be applied for within 28 days of appointment.

For directors appointed on or after 5 April 2022, a Director ID must be applied for before appointment.

We do note that there is a power for the Registrar of the ABRS to extend the 28 day application period, including by way of a class instrument.

Importantly for foreign corporations registered under the Corporations Act, if a new foreign director is appointed after 1 November 2021, a Director ID need to be applied for within 28 days of appointment.

What is the application process?

Australian directors

For directors with an Australian “MyGovID” (which requires Australian identity documents) or with an Australian tax file number, there are online or telephone application processes.

Foreign directors

For foreign directors, however, the application process is paper-based and hard copies of identity documents (such as passports, birth certificates, photo ID cards or driver’s licences) will need to be certified by staff at an Australian Embassy, High Commission or Consulate or by a Notary Public.

Further details pertaining to the paper-based process for foreign applicants are set out in the Annexure, extracted from the ABRS website.

What are the penalties?

Criminal and civil penalties can be imposed for breach of the provisions, including failure to apply for a Director ID within the time required. Substantial civil penalties of up to A$1,050,000 (5000 penalty units) can be imposed.

Please click the download PDF button to view the Annexure, being an extract from the ABRS website.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).