You are incorporating your startup this week. Your co-founder is ready to sign the consent to act as director. Here is the question almost nobody asks in time: does your co-founder already have a director identification number? Because since 5 April 2022, the law requires a person to have applied for — and, in practice, to hold — a director ID before the day they are appointed, not within a grace period afterwards, and failing to comply is a strict liability criminal offence. For a founder with an Australian passport and a myID login, fixing this takes ten minutes. For the overseas nominee director your US lead investor wants on the board at Series A, it can take months.
The director ID regime is one of those pieces of compliance plumbing that seems trivial until it sits in the critical path of an incorporation, a financing or an acquisition. Here is how it actually works.
What a Director ID Is
A director ID is a unique 15-digit identifier issued once to a person, for life. It follows the individual — not the company — across every directorship they ever hold, through name changes, moves overseas and resignations. The regime sits in Part 9.1A of the Corporations Act 2001 (Cth), inserted in 2020 as an anti-phoenixing measure: before the regime, “John Smith” could be a director of six failed companies with slightly different birthdates on each ASIC record, and nobody could reliably connect them.
The regime is administered by Australian Business Registry Services (ABRS), a function of the ATO, with the Registrar responsible for issuing IDs and verifying identity. ASIC enforces the offences. Applying is free, and — a point that surprises founders who delegate everything — the director must apply personally. Because the application verifies the individual’s identity, your lawyer, accountant or registered agent cannot lodge it on your behalf.
Who Needs One — and Who Doesn’t
You need a director ID if you are a director (or an alternate director acting in that capacity) of a company registered under the Corporations Act, a registered foreign company, a registered Australian body, or an Aboriginal and Torres Strait Islander corporation under the CATSI Act. Two applications of that rule catch startup people regularly:
- Every founder-director needs one, from day one — including the director of the dormant holding company or the corporate trustee of your family trust or SMSF. There is no small-company or startup carve-out.
- Alternate directors are inside the regime once they act in the role — relevant where an investor’s fund appoints a principal as director with an alternate for when they are unavailable.
Just as important is who is outside it. Company secretaries do not need a director ID. Nor do people who carry “director” in a job title without being appointed to the board — your Director of Engineering is fine. External advisers and advisory board members do not need one, because an advisory board properly structured carries no appointment under the Corporations Act. And board observers — the seat many startups offer smaller investors — sit outside the regime entirely, which is one more reason observer seats are a lower-friction concession than a full directorship. The caveat: these exclusions depend on the person genuinely not being a director. Someone who functions as a de facto director has bigger problems than a missing ID, because the duties and liabilities of a director attach to the role, not the title.
The Timing Trap: Before Appointment, Not After
For anyone becoming a director of a Corporations Act company for the first time, the rule since 5 April 2022 is blunt: you must have applied for your director ID before the day you are appointed. There is no 28-day grace period any more. (Strictly, section 1272C contains an exception while an application lodged before appointment is still being determined — but the safe and standard practice is to hold the ID itself before the appointment takes effect, and for online applicants there is no reason not to.) Practically, that means the ID belongs on the incorporation checklist alongside the company name search — before you lodge the Form 201, before the board resolution appointing a new director, before completion of the financing at which the investor’s nominee joins the board.
For Australian residents the fix is quick: apply online through ABRS using myID (the credential formerly called myGovID) at Standard or Strong identity strength, and the ID is usually issued on screen immediately. Phone applications are available for those who can’t use myID.
Overseas Directors: Start Months Early
Here is where deal timetables get hurt. A person outside Australia without Australian identity documents generally cannot set up myID — so they must apply on a paper form (NAT 75433), attaching certified copies of identity documents. Certification must be done properly: by a notary public or by staff at an Australian embassy, high commission or consulate. ABRS quotes processing times measured in weeks once the application arrives; with international couriers, notary appointments and any requisitions from the Registrar, the realistic end-to-end timeline is two to three months.
So if your Series A term sheet gives the lead investor a board seat and their nominee is a partner sitting in San Francisco or Singapore, the director ID application should start when the term sheet is signed — not when completion is being scheduled. (Lodging the paper application before appointment engages the statutory exception while it is pending, but no well-advised investor wants their nominee’s compliance resting on a form in the mail.) The same applies to a US parent appointing directors to a new Australian subsidiary after a Delaware flip, and to acquirers planning to reconstitute the target’s board at completion. A completion that has to wait on a paper form in a diplomatic bag is an avoidable embarrassment.
Enforcement Is Real, and the Register Is About to Get Teeth
Failing to have a director ID when required contravenes section 1272C of the Corporations Act — a strict liability offence carrying a maximum of 60 penalty units ($21,840 at the current $364 penalty unit), with civil penalty exposure on top. This is no longer theoretical: ASIC has been steadily prosecuting, and in May 2026 two NSW directors were convicted and fined $10,000 each for failing to have director IDs — part of a run of prosecutions ASIC says now numbers eleven. Deliberate misconduct — applying for multiple IDs or misrepresenting one — can attract imprisonment.
Two more practical points. First, investors and acquirers now routinely ask for director IDs in due diligence questionnaires; a director who cannot produce one is a red flag that costs you credibility at exactly the wrong moment. Second, the regime is about to become visible: from 1 July 2027, companies will be required to provide their directors’ IDs to ASIC at annual review or when notifying changes to directors’ details, and the companies register will progressively show whether a company’s directors have complied (the ID numbers themselves stay non-public). Non-compliance that today sits quietly in an ABRS database will then surface on the register every investor and counterparty searches.
The Bottom Line
The director ID is a ten-minute task that becomes a two-month problem only when it is left to the week of completion. Put it on the incorporation checklist for every founder-director, confirm IDs before any board appointment resolution, leave advisers and observers outside the boardroom door if they don’t need to be in it, and start the paper process for any overseas nominee the day the term sheet is signed. From July 2027, the register will show who got this right.
This article is general information only, not legal advice. Viridian Lawyers advises Australian startups on incorporation, corporate governance, board composition and financing rounds — including getting the compliance sequencing right so it never holds up a deal. If a board change or a round is coming up, get in touch.
