Licence and Registration? Director Identification Numbers Now Mandatory Throughout Australia
*Please note that this article provides general information only and will not be applicable in all circumstances, nor should it be relied upon as legal advice. Should you wish to obtain legal advice, we recommend that you get in touch with us.
All directors throughout Australia need to obtain a director identification number (Director ID or DIN), under updated laws designed to mitigate the risks of potentially fraudulent behaviour. This regime is captured by amendments to the Corporations Act 2001 (Cth) (Corporations Act) and the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act).
What is a Director ID?
A Director ID is a unique number assigned to a director, which is designed to confirm their identity by providing a database of information linked to the director which can be monitored by regulators and other parties. A director will only be required and able to apply for one Director ID during their lifetime, enabling them to be tracked more easily if, for example, they shift to a new company.
What information must a director provide?
In applying for a Director ID, a director may be required to provide the following information:
a) name and any former names;
b) address and any former addresses;
c) contact details (though what this may entail is not set out); and
d) date and place of birth.
Further information, such as the individual’s tax file number, may be requested by the registrar, but the registrar is not empowered to compel the individual to provide this information. There is also provision for alternative methods of identification (including by a third party) if the above information is not able to be provided, or the registrar considers it reasonable.
Crucially, once an individual has a Director ID, it is their responsibility to inform the registrar of any errors in or corrections to their information.
Who must obtain a Director ID?
Under the Corporations Act, an ‘eligible officer’ must obtain a Director ID by the relevant deadline specified. This will mainly cover directors of a company (irrespective of their title), or those persons of a body corporate that is a registered Australian body or registered foreign company, who:
a) are appointed as a director; or
b) are appointed as an alternate director and acts in that capacity.
However, other officers of corporations may be required to obtain Director IDs if this is prescribed by the regulations. A director of a company or body corporate registered under the CATSI Act will also be required to obtain a Director ID.
When must a director apply for a Director ID?
The Director ID regime will apply to individuals differently depending on when they were first appointed as a director. The below table summarises this.
| Date of first appointment as director | Deadline for applying for a Director ID |
|---|---|
| Prior to 1 November 2021 | 30 November 2022 |
| Between 1 November 2021 and 4 April 2022 | Within 28 days of appointment |
| From 5 April 2022 | Before appointment |
Why has this requirement been introduced?
The primary justification is to prevent fraudulent activities by directors, such as ‘illegal phoenixing’, which occurs when, in order to avoid paying debts, directors wind up, liquidate or abandon their company, and subsequently transfer assets and/or continue operations under a newly established company or business. According to the explanatory memorandum, illegal phoenixing costs the Australian economy between $2.9b and $5.1b annually.
Beyond this, the Director ID regime enables regulators to track directors and their corporate history, thus promoting proper corporate conduct and helping facilitate confidence in the corporate sector.
How do directors apply for a Director ID?
Directors can apply for a Director ID digitally, through the Australian Business Registry Services. In order to apply online, directors must have a myGovID already in place. Beyond this, they will be required to provide relevant identifying information to complete the process.
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Author, Darcy Keogh and Isaac Hanna.
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