Company directors must now apply for a Director ID that will follow them across their corporate careers in an effort to clamp down on illegal phoenixing and other forms of fraud.

The Director ID system became available on Monday and covers the roughly 2.7 million company directors in Australia.

Jane Hume, Minister for Superannuation, Financial services and the Digital Economy, said the identification scheme “paves the way” for more streamlined services as well as protecting company directors from fraud.

“Director ID will help to create a fairer business environment by improving data integrity, creating greater confidence in directors’ identities, and allowing earlier identification of director involvement in unlawful practices, such as illegal phoenix activity,” Hume said in a statement.

“Director ID will help to prevent false and fraudulent director identities, which ensures business owners doing the right thing get a fair go.

“It will make doing business easier, faster and safer.”

Directors can sign up for their 15-digit number on the Australian Business Registry Services (ABRS) website with identity services provided by the myGovID app.

Existing directors have until 30 November 2022 to apply for the ID, while new directors appointed between now and 4 April 2022 will have 28 days to apply.

After 5 April 2022, new directors will need an ID before their appointment.

Director IDs are designed in part to mitigate against illegal phoenixing activity.

This is when a new company is formed that effectively continues the activity of an abandoned or liquidated company to avoid paying debts – such as to employees, contractors, and the tax office.

A 2018 government report into phoenixing estimated the annual cost of this activity to be between $2.85 and $5.13 billion.

Government agencies and corporate regulators hope that the Director ID will make it easier to monitor this behaviour and track other potentially fraudulent corporate activity.

The scheme is part of the government’s $419.9 million Modernising Business Registers program that seeks to make it easier for businesses to fulfil their registration obligations by bundling together more than 30 government registers into one online portal, the ABRS.