Becoming a Company Director
Before becoming a director, you need to fully understand the role and the legal obligations regarding the management of the company. A company is a separate legal entity that exists under the law in its own right and is like a normal person can nearly do all things such as entering into contracts, borrowing money, and buying and selling assets. And because the company exists as a separate entity, you as a director must carry out your duties by certain rules as stated in our previous blog.
If you are at least 18 years old and agree to assume the duties of a director, you can become the director of a company. Before being nominated as a director, you must give your written consent, which must be signed and kept by the company. ASIC must also be notified.
You cannot become a director if you have entered into a personal insolvency agreement under the Bankruptcy Act 1966 and failed to fully comply with the terms of the agreement. Additionally, if you have been found guilty of dishonesty-related charges like fraud or if you have been barred from managing corporations under the Corporations Act 2001 by ASIC or a court (the length of the ban will be determined by ASIC or the court).
Director Identification Number
One of the Company director’s requirements is applying for a Director Identification Number (Director ID). A director ID is a unique identifier that a director will apply for once and keep forever which helps prevent the use of false or fraudulent director identities.
Who is required to get a director ID?
All directors of a company registered Australian body, a registered foreign company, or an Aboriginal and Torres Strait Islander corporation will need to secure a director ID.
Note that ASIC is the one responsible for enforcing director ID offenses set out in the Corporation Act 2001.
When to apply for a director’s ID?
Applying for a director ID depends on when you become a director. For directors of companies regulated by ASIC and registered under the Corporations Act 2001:
- Intending new directors must apply before being appointed.
- Directors appointed on or before 31 October 2021 have until 30 November 2022 to apply.
- New directors appointed for the first time between 1 November 2021 and 4 April 2022 had 28 days from their appointment to apply.
- The directors of companies regulated by the Office of the Registrar of Indigenous Corporations and registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 have a different time frame in which to apply.
The Australian Business Registry Services (ABRS) are the ones who will provide support and guidance to directors for them to fully understand and meet their director ID obligation.
You may visit the official website of Australian Business Registry Services (ABRS) for more information on securing a director’s ID or you can apply directly at https://www.abrs.gov.au/director-identification-number/apply-director-identification-number
Director ID offenses and penalties
There are four new director ID offenses under the Corporations Act 2001.
- Failure to have a director ID when required to do so is subject to maximum penalties of $13,200 (criminal); $1,100,000 (civil) under legislative section 1272C.
- Failure to apply for a director ID when directed by the registrar is subject to maximum penalties of $13,200 (criminal); $1,100,000 (civil) per legislative section 1272D.
- Applying for multiple director IDs is also subject to maximum penalties of $26,640, 1-year imprisonment, or both (criminal); $1,100,000 (civil) following legislative section 1272G.
- Misrepresenting director ID is subject to maximum penalties of $26,640, 1 year imprisonment or both (criminal); $1,100,000 (civil) and is accordance to section 1272H.
Contact Calculated Matters at business@calculatedmatters.com.au to set up a meeting or arrange a time to speak with us if you are in need of assistance with how to get your director ID.
