The 4-step guide to getting a Director ID
When the word director gets mentioned, your mind immediately conjures up thoughts of a Hollywood movie mogul ordering A-list actors around at an exotic location. So, whilst you may not be handy behind the camera like Steven Spielberg, you could indeed still find yourself being a director of an Australian company. As a director, you must act in the company's best interests, but before you can formally be appointed, you must obtain a director ID. In this guide, we'll run through the four steps required to get a director ID and why you must do it right.
A director is appointed to manage a company's affairs and make strategic decisions on behalf of its shareholders. Directors have a legal responsibility to act in the company's and its shareholders' best interests, and they are ultimately responsible for the company's financial and legal compliance. There are two types of directors you can become:
- Executive director: An employee who works day-to-day in the business.
- Non-executive director: Someone who doesn't work for the company on an ongoing basis.
If a company is registered as a private entity (Pty Ltd), then at least one director must be appointed. If a company is registered as a public entity (listed on the Australian Stock Exchange), then at least three directors must be appointed.
Becoming a director is an important position and something that creates many career opportunities. The benefits of becoming a director include the following:
Being a director allows you to develop leadership and strategic decision-making skills. It can also provide exposure to different industries and sectors, which can benefit your personal and professional growth.
Being a director can provide opportunities to network with other professionals in the industry, which can lead to new business opportunities and collaborations. Many non-executive directors work with multiple businesses and may also sit on company Boards.
Directors are typically compensated for their role, which can include a salary, bonuses, and stock options. The bigger the business, the more lucrative the remuneration. As a director, there are opportunities for advancement and growth within the company, such as becoming a CEO or other executive position.
Sense of Purpose
Directors have the opportunity to contribute to the success of the company and make a positive impact on the broader community. Many senior leaders towards the back end of their careers choose to support earlier-stage businesses as non-executive directors to pass down their experience.
Being a director does come with legal and financial responsibilities and potential liabilities, so it's important to consider the size and type of the company, its goals, and its needs before becoming a director. Whilst directors have some legal protection in the case of legal disputes, and they are not always personally liable for their actions as a director, you must fully understand the role and the risks before taking on a directorship.
Once the decision to appoint a director is approved through the appropriate forum, such as a Board meeting, there are four steps the business must take to register the director:
- Director Appointment: To become a director, you must be 18 years or older and not be disqualified from managing a corporation by a court or the Australian Securities and Investments Commission (ASIC). Directors are appointed by the shareholders of a company, usually at an annual general meeting. The appointment of directors can also be made by a company's constitution or the company's Board of directors. Minutes must be kept from the meeting confirming the appointment.
- Setup myGovID: A Director ID is a unique identifier the Australian Business Registry Service (ABRS) assigns to each director of a company registered in Australia. It's used to track director appointments for various regulatory and compliance purposes. To obtain a director ID, you will need to have a myGovID setup, and you will need to provide personal details and proof of identity.
- Obtain Director ID documents: To submit a valid application, you'll need some extra information, such as your Tax File Number (TFN) and residential address as registered with the ATO, plus you may also require bank account details or your last ATO notice of assessment.
- Lodge Application: To apply, you'll need to go to the ABRS site and lodge an application. You can log in with your myGovID and upload the other documents you gathered. Once you submit the application, you'll be notified of your Director ID via letter once everything is processed. It can take up to 56 days for an application to be processed.
Once your director ID is confirmed, you can update ASIC and the company of which you are becoming a director. The final step to becoming a director is to complete the 490 form, which can then be sent to the following address:
Australian Securities and Investments Commission,
PO Box 4000, Gippsland Mail Centre VIC 3841
After registering as a Director, it's important to keep the company and ASIC informed of any changes to your personal details, such as your name, address, or contact information.
Director ID FAQs
What is a Director ID?
A Director ID is a unique identifier issued by the Australian Securities and Investments Commission (ASIC) to company directors. It is a 10-digit number that is used to identify directors across all companies in which they hold a directorship.
Why is a Director ID important?
A Director ID is necessary because it helps ensure that company directors' identity is accurately recorded and maintained. It also makes it easier for ASIC and other government agencies to track the directorships held by individuals and enforce legal and regulatory requirements.
Who needs a Director ID?
All individuals appointed as directors of companies registered in Australia need a Director ID.
How do I get a Director ID?
To get a Director ID, you must register with ASIC using the online registration portal. You must provide personal identification information and other details such as your date of birth, residential address, and contact details.
Is there a fee for a Director ID?
Yes, there is a fee for a Director ID. The current price for registering for a Director ID is $39.
How long does it take to get a Director ID?
The time it takes to get a Director ID can vary depending on the completeness of the information provided and the workload of ASIC. Typically, it takes up to 28 days for ASIC to process a Director ID application.
Is a Director ID transferable?
No, a Director ID is not transferable. It is linked to the individual director and cannot be transferred to another person.
What happens if a director does not have a Director ID?
From 18 November 2022, all company directors must have a Director ID. If a director does not have a Director ID, they cannot be appointed as a director of a company.
Can a company have more than one director with the same Director ID?
No, each director must have their own unique Director ID. A company cannot have multiple directors with the same Director ID.
The Director ID was introduced in Australia as part of a government effort to improve transparency and accountability in the corporate sector. Because the Director ID is a unique number assigned to each individual who serves as a company director or a registered scheme, it helps regulators track the activities of directors and ensure that they comply with their legal obligations. The Director ID also assists in preventing fraud and other forms of misconduct by making it easier to identify and investigate individuals who may be involved in such activities.
Being appointed as a director of a business is an incredible honour that comes with significant financial and decision-making responsibilities. As a director, you are a key decision-maker who must act in the company's best interests. Registering as a director and obtaining a Director ID can be complicated, and you must ensure you are registered correctly to avoid any issues later down the track.