Since the introduction of the Director ID Number on 1 November 2021, most advisors and directors are now well versed in the new requirements and applicable deadlines. These requirements are outlined on the Australian Business Registry Services (ABRS) website and hundreds of articles have been written reiterating the requirements. Over 240,000 directors have applied for their Director ID so far, of which approximately 94% have applied online.
In the month after CorpSec Services presented a webinar to over 3,000 attendees and launched an eLearning course on the new Director ID requirements, we received numerous questions regarding the requirements. The most commonly asked questions and answers are detailed below:
1. Do ALL directors appointed to a company after 1 November 2021 have to apply for their number within 28 days of their appointment or just first-time directors? What does a newly appointed director actually mean?
This question was by far the most asked question. Mostly because it wasn’t addressed clearly from the outset on the ABRS website and various articles were circulating stating that it included all existing directors appointed to an additional company after 1 November 2021. Despite clarifying in our courses that it only applied to first-time directors (and not existing directors appointed to additional companies) there was a lot of confusion regarding this in the early months. The ABRS website has now been updated to state:
“If you were already a director on or before 31 October 2021, you have until 30 November 2022 to apply. That’s still the case even if you become a director of another company after 31 October 2021.”
2. Do directors of dormant companies still need to apply?
Yes, the new requirements relate to all companies registered in Australia (including foreign companies registered in Australia), whether trading or dormant.
3. Do directors of a company in the process of being deregistered need to apply for a Director ID Number?
If a company is struck off ASIC’s Companies Register before the deadline directors need to apply (30 November 2022) and the director(s) of that company are not directors of any other company, then there is no requirement for the director(s) to apply.
4. Do directors or their ASIC Agents need to provide the Director ID number to ASIC?
ASIC does not need to be provided with the director ID number. At this stage, there are no ASIC forms that have been updated to include the Director ID number.
5. What do directors do with their Director ID number once issued by the ABRS?
Directors should provide their Director ID number to their ASIC Registered Agent, the Company Secretary or other person they rely on to manage the company compliance matters. However, it won’t have much use during the transition period.
6. What if a new director doesn’t apply for their Director ID Number within 28 days?
As we know, if a person becomes a first-time director after 1 November 2021 (and before 4 April 2022), the director must apply for a director ID within 28 days of their appointment.
ASIC has recently advised that the ABRS is currently identifying those newly appointed directors who have not applied for their director ID within 28 days of their appointment. The ABRS will begin making contact with those directors to make them aware of the obligation and encourage application. Non-compliance after this initial grace period will no doubt lead to penalty notices. It is a criminal offence if directors do not apply on time.
Directors experiencing difficulties in meeting the 28-day deadline are encouraged to apply for an extension. This particularly applies to foreign directors who may need to apply via paper form. Further details can be found here.
Newly appointed directors after 5 April 2022
With only 2 months remaining before the next key date of 5 April 2022, the focus should now be on how the next key change will affect company registration processes and new director appointments.
A first-time director will need to apply for their Director ID number BEFORE they can be appointed. This is, BEFORE the company can be registered with that first-time director. This will add yet another hurdle into the mix when setting up a new business or needing a new company urgently for a transaction.
Our big tips to manage this key change are as follows:
if you think you’ll need a new company soon and you’re a first-time director, apply for your Director ID number early. This applies to foreign directors also who need to apply in paper form and can take several weeks or even months. You can apply up to 1 year before you are actually appointed or register the company. Don’t wait until the company is needed urgently.
In most cases, a director can apply for a Director ID number online in 10-15 minutes. Certain directors who have different names on their primary identification documents can experience problems applying online. Paper applications for Director IDs can take several weeks to be processed. You won’t necessarily know if you will have difficulties until you apply. So, applying early is the recommended approach.
For company registration providers/ASIC Agents, temporary director services may be required to fast track urgent company registrations until the intended director(s) have applied for their Director ID and can be appointed.