Director IDs are good for transparency but may have unintended consequences

A new regime commencing on 1 November 2021 will require unique director identification numbers for all current directors, alternate directors, or those intending to become directors of:

  • ORIC-registered Aboriginal corporations, and
  • ASIC-registered corporations, incorporated associations registered to operate outside their home jurisdiction, corporate trustees, or foreign companies.

For Aboriginal corporations, directors must apply:

  • where appointed on or before 31 October 2021, by 30 November 2023, or
  • where appointed from 1 November 2022, prior to their appointment.

For Corporations Act directors, directors must apply:

  • where appointed on or before 31 October 2021, by 30 November 2022,
  • where appointed between 1 November 2021 and 4 April 2022, within 28 days of appointment, or
  • where appointed from 5 April 2022, prior to their appointment.

Each individual is responsible for securing their unique ID using online, phone or paper-based verification processes outlined on the Australian Business Registry Services website, by the relevant deadlines. While an extension may be sought, a failure to secure an extension or to meet deadlines may attract infringement notices and civil or criminal penalties.

The reforms have important benefits for combating phoenix and fraudulent activity and ensuring greater transparency for those electing directors, however, they may also have unintended consequences. Considering the challenges for many persons seeking to verify their identity, particularly Aboriginal and Torres Strait Islander peoples in Australia, meeting documentary requirements by the timeframes specified may prove very difficult and may either prevent their opportunity to become a director or expose them to penalties for failing to secure their director ID. This has significant implications given the critical role, for example, of native title and charitable corporations and trusts for Aboriginal and Torres Strait Islander communities, and the need to ensure members can freely choose the right Board representatives based on their community relationships, authority, knowledge and skills, not their ability to prove their identity to a Western corporate standard.

While the deadlines for compliance may seem lengthy, corporations should start work now to ensure existing directors and as many people as possible who might be considered for directorship are provided with the resources and assistance to secure their director IDs, particularly where the verification of their identity is likely to be difficult.

For more information about how these changes may affect you, contact Maria Lamattina at Perth Commercial Lawyers.