An Introduction
LEI Number Legal Entity Identifier is a unique global identifier for legal entities participating in financial transactions. Also known as an LEI code or LEI number, its purpose is to help identify legal entities on a globally accessible database. Legal entities are organizations such as companies or government entities that participate in financial transactions. An individual person may not obtain a LEI. The identifier is used in regulatory reporting to financial regulators and all financial companies and funds are required to have an LEI.
LEI Number Legal Entity Identifier is referred to as LEI, LEI Codes or LEI Numbers. An LEI is defined as a unique 20-character alphanumeric string (e.g., 529900T8BM49AURSDO55) and the code represents a Legal Entity such as company, organization, firm, government body, trust, or fund.
The LEI number is based on the ISO 17442 standard and each LEI is assigned only to a single Legal Entity, even across different geographical jurisdictions.
Purpose Of LEI Number: –
The purpose of a LEI number is to provide a systematic and organized way of categorizing and accessing the numerous laws passed by the Brazilian government. It helps legal professionals, scholars, government officials, and the general public easily locate and reference specific laws when researching or applying the law.
In essence, the Lei number is a vital component of the legislative process, legal research, and the functioning of the legal system in Brazil. It aids in maintaining transparency, consistency, and accessibility in the country’s legal framework.
The overall purpose of the LEI number is to create financial transparency. LEI requirements vary depending on the country, legal jurisdiction or industry. It is the prerogative of the authorities acting in individual jurisdictions to mandate the use of LEIs.
Benefits Of LEI Number: –
LEI entity search provides for transparency within the global market. Since the verification of the details of legal entities takes place, data accuracy is maintained. While registering a new legal entity, LEI search is useful to know if the proposed registration has not received or applied before. Once the legal entity ensures that it is not already assigned an LEI, it may proceed with the registration process. It helps legal entities while entering into financial transactions with other entities.
The benefits of having a LEI Number Legal Entity Identifier here are some potential benefits of having an LEI:
• Global Identification: LEIs provide a standardized and unique identification code for legal entities participating in financial transactions. This helps in identifying and tracking entities across various jurisdictions and markets, reducing confusion and errors.
• Transparency and Accountability: LEIs contribute to increased transparency and accountability in the financial system. They facilitate better understanding of relationships between different entities, which can be useful for risk assessment, regulatory compliance, and fraud prevention.
• Regulatory Compliance: Many financial regulations and reporting requirements, such as MiFID II, EMIR, and Dodd-Frank, mandate the use of LEIs for certain transactions. Having an LEI ensures that your entity remains compliant with these regulations, avoiding potential penalties and disruptions to business operations.
• Risk Management: Financial institutions and counterparties often use LEIs to assess the creditworthiness and risk associated with conducting business with a particular entity. LEIs provide a standardized way to access essential information about an entity’s ownership, structure, and financial health.
Registration Process For LEI Number: –
• Choose an LEI Issuer: The first step is to select an authorized LEI issuer. These are organizations that are accredited by the Global Legal Entity Identifier Foundation (GLEIF) to issue LEIs. Legal Entity Identifier India Limited, a Wholly Owned Subsidiary of The Clearing Corporation of India Ltd. acts as a Local Operating Unit (LOU) for issuing globally compatible Legal Entity Identifiers (LEIs) in India.
• Provide Entity Information: You will need to provide detailed information about the legal entity for which you’re seeking an LEI. This includes the legal name, registered address, ownership structure, and other relevant details. You may also need to provide supporting documents to verify the accuracy of the information provided.
• Fill Out the Application: The next step involves filling out the LEI application form provided by the chosen LEI issuer. This form will typically require information about the entity’s legal structure, ownership, governance, and other relevant details.
• Verification and Documentation: Depending on the LEI issuer and the jurisdiction, you may need to submit supporting documents to verify the accuracy of the information provided in the application. These documents might include articles of incorporation, business licenses, ownership structure documents, and more.
• Review and Submission: Review all the information provided in the application and make sure it is accurate and complete. Submit the application and any required documentation to the chosen LEI issuer.
• Payment: There is usually a fee associated with obtaining an LEI number. The cost may vary depending on the issuer and the jurisdiction. Make sure to pay the required fee as part of the application process.
• LEI Assignment: Once the LEI issuer receives your application and verifies the information, they will assign an LEI number to your entity. This number is unique and will be used to identify your entity in various financial transactions and reporting requirements.
Documents Required For LEI Number Legal Entity Identifier: –
1. Legal Entity Information:
• Full legal name of the entity
• Registered address and business location
• Legal form of the entity (e.g., corporation, partnership, trust)
• Registration or incorporation number
• Date of registration or incorporation
• Ownership and Control Information:
• Ultimate parent company’s LEI, if applicable
• Ownership structure and percentage ownership of significant owners or shareholders
2. Registration Authority Information:
Details of the registering authority (e.g., company registry, government agency)
3. Executive Management Information:
Names and identification details (such as passport or national ID) of key individuals in executive positions (e.g., CEO, CFO)
4. Contact Information:
Contact details for the legal entity (e.g., email address, phone number)
5. Supporting Documentation:
• Copies of legal documents that confirm the entity’s legal existence and registration, such as articles of incorporation, partnership agreements, trust deeds, etc.
• Proof of address (e.g., utility bill, bank statement)
• Identification documents for key individuals (e.g., passports, national IDs)
• Organizational charts or ownership structures, if applicable.
Frequently Asked Questions(FAQs)
Question1- Who is eligible for LEI registration?
Answer- Sole Proprietorships, Limited Liability Partnerships, Partnership Firms, Trusts, Private Limited Companies, Public Limited Companies, Government Companies, One Person Company, Insurance Companies
Question2- What is the limit of LEI?
Answer- Borrowers with a total exposure above ₹25 crore must obtain LEI by April 30, 2023, and borrowers with total exposure above ₹10 crore and up to ₹25 crore must obtain LEI by April 30, 2024.
Question3- Who issues LIE code?
Answer- It can be obtained from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI.
Question4- What are LEI registration charges?
Answer- For New Registration: Rs.4500 + 810 (18% GST) = Rs.5,310 (Revised from Rs 5000+GST=Rs.5900) With effect from Jan 1, 2019.
Question5- Does LEI code expire?
Answer- Yes, The LEI code is valid for 1 year from the date of issue then it is renewed.
Question 6- Is LEI code mandatory?
Answer- LEI is also mandatory for all participants, except individuals, who wish to take part in markets regulated by RBI.
External Links
• Legal Entity Identifier India Limited Official Website https://www.ccilindia-lei.co.in/Default.aspx
• LEI Number Search https://www.ccilindia-lei.co.in/USR_PAGEOUT.aspx?id=gtbxvsozj01pfd3fxrl0fwoe931862a3da824042bd4170c396ae3dfb
• LEI Certificate Download https://www.ccilindia-lei.co.in/USR_LEI_DOWNLOAD_CERTIFICATE.aspx
• Rules, FAQs and Documents https://www.ccilindia-lei.co.in/USR_FAQ_DOCS.aspx