Introduction

Prospective company directors are now legally required to apply for a Director Identification Number before they are appointed. The consequences of failing to do so can be severe.

What do new directors need to do?

From 5 April 2022, individuals to be appointed as  company directors for the first time must apply for a Director Identification Number (Director ID) prior to their appointment. If you anticipate that you will become a director in the next 12 months, you should apply for a Director ID.

A Director ID is a unique 15-digit identification code that is issued to directors who have verified their identity with the Australian Business Registry Services (ABRS). Director IDs have been introduced as a new initiative to prevent the use of fraudulent or false director identities in business. Over the next year, all company directors in Australia will be required to obtain a Director ID, but as of 5 April 2022, incoming directors will need to apply for their ID before they commence as a director.

For the answers to some key FAQs about Director IDs, see our article here.

What happens if I apply for a Director ID, but don’t become a director?

If you are not appointed as a director within 12 months of obtaining the Director ID, then the ID will be deactivated. If your ID is deactivated, you can apply again for an ID whenever you choose and will be issued with the same number.

I am already a director of a company. Do I need to apply for a Director ID?

All company directors need to apply for a Director ID, but the application deadline depends on the date that you became a director.

If you became a director for the first time:

• On or before 31 October 2021, you need to apply by 30 November 2022;
• Between 1 November 2021—4 April 2022, you need to apply within 28 days of your appointment; and
• On or after 5 April 2022, you need to apply for a Director ID before your appointment.

What happens if I don’t apply for a Director ID?

Failure to have a Director ID within the relevant timeframe is an offence under the Corporations Act 2001 (Cth).

If you do not apply for a Director ID before you are appointed as a director of a company, you may be prosecuted by ASIC and issued with a criminal penalty of $13,200 or a civil penalty of $1,100,000.

Next steps

Whilst this may not be Squid Game, the consequences of failing to obtain a Director ID can be significant. If you require advice on anything to do with acting as an Australian director generally, or Director IDs specifically, please contact us below.