Director ID in Australia: why it matters and how to obtain yours as a non-resident

A Director Identification Number (DIN), or Director ID, is a unique identifier introduced in Australia to enhance corporate accountability and reduce fraud within companies. For individuals residing outside Australia who are either serving as or considering becoming directors of Australian companies, understanding this system and complying with its requirements is essential. Below, we outline everything you need to know about the Director ID: why it is required, who needs it and how to apply for and manage it effectively.

By Ro Elvinia

How does the Director ID work
A Director ID is a unique 15-digit number issued by the Australian Business Registry Services (ABRS), an Australian government initiative that administers business registers, including the Director ID system, for all individuals – resident or non-resident – serving as company directors. The ID is linked to a director for life, allowing the ABRS and regulatory bodies such as the Australian Securities and Investments Commission (ASIC), Australia's primary corporate regulator, to identify and track directors across different companies. This tool plays a crucial role in safeguarding against corporate fraud, such as phoenix activities, where directors close down companies to avoid paying debts and re-establish under a different name.

The Director ID system is designed to enhance transparency, making it easier to verify the identity of company directors and prevent directors from using fictitious or misleading information to establish multiple companies. Additionally, by creating an official record, the Director ID system strengthens governance and encourages directors to meet their legal obligations and responsibilities.

Who needs to apply for a Director ID and when
The requirement for a Director ID applies to:

1. Directors of Australian companies or individuals appointed as directors under the Corporations Act 2001.
2. Directors of an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

Application Deadlines

How to apply for your Director ID
There are three available methods for Australian residents applying for a Director ID. The first and most convenient is the online application, which involves creating a MyGovID account, gathering supporting documents and completing the application through the ABRS website. The second option is by phone; applicants must prepare the necessary documents and call the ABRS to apply. Last option is by paper form, requiring applicants to download, print and complete the application form, attach supporting documents and mail them to the ABRS.

For non-residents, the process can be somewhat challenging, as the only way to apply is through the paper application form. Non-resident applicants must submit one primary and one secondary identification document. If you have changed your name, an additional document showing proof of the name change – such as a marriage certificate, deed poll or change of name certificate – is also required. All documents must be certified by approved certifiers outside Australia. If the certified documents are not in English, they must also be translated by an approved translator, including a translation of the certification.

What are the applicable penalties
Failure to obtain a Director ID as a company director can lead to penalties, including fines, making compliance both beneficial and legally mandatory under the Corporations Act 2001. The corresponding offences and penalties are as follows:

Foreign directors are deemed compliant as long as they have applied for their Director ID, even if it has not yet been formally issued. The ABRS has notified that the processing time for issuing DINs to foreign directors currently ranges from 3 to 12 months. No further action is required at this stage, and you are considered legally compliant by both the ABRS and the legislation. Your DIN will be issued once the ABRS has processed your application.

How to manage your Director ID
Once you have obtained your Director ID, you are responsible for maintaining it. Here are some tips for effective management:

1. Keep Your ID Safe
   Like any other form of identification, ensure your Director ID is stored securely. Avoid sharing it unnecessarily.

2. Update Your Details
   If your details change (such as your name or contact information), notify the ABRS to keep your records up to date.

3. Provide Your Director ID to Companies
   Share your Director ID with the companies you serve as a director. Each company should record and verify it.

4. Retain Your ID for Life
   Your Director ID is permanent and does not change, even if you leave your position as a director or serve in multiple directorships.

Take the next step with ABN Australia
With nearly five decades of experience, ABN Australia has been a trusted partner in corporate compliance and governance since 1976. Our deep-rooted knowledge of local laws and regulatory requirements uniquely positions us to support non-resident directors and businesses in navigating the complexities of the Director ID process. Whether you need guidance on your Director ID paper-form application, including details on the required documents and approved certifiers outside Australia, or assistance with compliance, our experienced team is here to help. Contact us today to leverage our expertise and focus on growing your business with confidence.

Published: 21^st Nov 2024 | Last updated: 21^st Nov 2024