All company directors in Australia are required to verify their identity by way of the director ID regime. A failure by a director to comply with the obligations under the regime exposes that director to the very real risk of potential civil or criminal penalties. For one director, that risk has become reality with ASIC having recently brought the first prosecution case against a director for failing to comply with the director ID regime.
The director ID regime was introduced by the Australian Government back in 2022 and is governed by Part 9.1A of the Corporations Act 2001 (Cth) (the Corporations Act) and Part 6-7A of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (the CATSI Act).
All new directors appointed for the first time must apply for a director ID before they are appointed. For directors appointed prior to the introduction of the regime, the following timeframes were prescribed:
+ Directors appointed before 1 November 2021 had 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 the date of their appointment to apply.
Those deadlines have long since passed, although extensions of time to apply for a director ID may be granted after the period to apply has ended under s 1272E of the Corporations Act.
Directors who do not have a director ID, provide false application information, apply for multiple director IDs or give a false director ID under either of the Corporations Act or the CATSI Act may face civil or criminal penalties.
ASIC recently announced that it has brought the first prosecution action against a director for failing to comply with the requirement to have a director ID under the Corporations Act. The director (whose identity has been protected by an interim non-publication order) recently appeared in a local NSW Court charged with one count of contravening s 1272C(1) of the Corporations Act, facing a maximum penalty of $13,320. The charge has been listed for a further mention before the Court on 16 April 2024.
With ASIC demonstrating its willingness to bring prosecutions under the director ID regime, all directors and potential directors should be on notice that they face the genuine risk of civil or criminal penalties for any failure to comply with the director ID regime.