How to Obtain Legal Entity Identifier?

LEI – Legal Entity Identifier is an alphanumeric code with 20 characters. Based on ISO – 7442 standards developed by the  (ISO) International Organization for Standardization. It connects to essential reference information that enables unique and clear identification of legal entities participating in a financial transaction. Each LEI is categorized into 2 Sections – Level 1 data includes entity registration details such as Legal name, number of registration, legal and Headquarters address etc. Level 2 contains information about an entity’s ownership structure and thus answers the question of who owns whom. Further in this piece of writing, we shall be discussing how to obtain Legal Entity Identifier.

Purpose of LEI Code

The Legal Entity Identifier (LEI) code serves the following purpose:

• To provide consistent & accurate identification of legal entities which are parties to financial transactions
• To track financial exposure taken by the corporate
• To help in cost-effective compliance with regulatory reporting requirements
• To check credit rating, in the  case any new financial product is launched in the market to raise funds

Structure of LEI – Legal Entity Identifier Code

LEI is based on four principles – It is a Global Standard, Every Legal Entity is assigned a unique identifier, it is publicly accessible to all users, and high-quality data supports it. The code comprises 20 characters: –

1. Characters 1-4 are unique to each (Local Operating Unit) and are affixed by ROC Secretariat.
2. Characters 5-6 are reserved character characters (00).
3. Characters 7-18 comprise a 12-character reference that is assigned by the LOU to a particular entity based on transparent and sound allocation and sound allocation policies.
4. Characters 19-20 are two check digits under ISO 17442.

Who needs to obtain Legal Entity Identifier code?

LEI are mandatory for interest rates, credit derivative markets and Forex transactions. The RBI has made it mandatory for companies and organizations having aggregate fund–based and non – fund-based exposure of credit over Rs 50 Crore is required to obtain Legal Entity Identifier.

Documents Required to Obtain Legal Entity Identifier

The Following are the Documents required to obtain Legal Entity Identifier.

• Copy of PAN Card;
• Copy of Incorporation Certificate;
• Audited Financial Statement;
• Undertaking – Cum – Indemnity as per the prescribed format by LEIL (Legal Entity Identifier India Limited);
• Board Resolution as per prescribed format by LEIL;
• Power of Attorney as per the specified format by LEIL;
• Auditor Certificate issued by the Chartered Accountant as per the prescribed format by LEIL;

Process to Obtain Legal Entity Identifier

The following are the steps to obtain Legal Entity Identifier:

1. The legal entity should register as a new user on the official portal of Legal Entity Identifier India Limited.
2. The application has to be submitted by a duly authorized person to create an account using the option on the website and fill in the required details.
3. Once the account has been created, a confirmation e-mail will be forwarded to the registered e-mail id to activate and verify the account.
4. The duly authorized may then press the link provided in the e-mail to activate the account.
5. After successful login, the duly authorized can register and fill in the necessary details.
6. After creating an account, the official must select the ‘Information’ button and click on ‘Legal Doc Download’.
7. The list of vital documents for each legal form is available, and it can be downloaded.
8. The authorized person will submit the registration form in the physical documents as there is no option to upload documents on the Legal Entity Identifier India Limited (LEIL)^[1] portal. The documents have to be submitted to the Legal Entity Identifier India Limited (LEIL).

LEI (Legal Entity Identifier) Renewal

A Legal Entity Identifier code is generally valid for one year to continue using this code; it must be renewed annually through an application form. This can be found on the same online website the difference this time around is to select the option “Modify & Renewal” and not the “register” option. Again, any modification to this part will also require the authorized person. Once the LEI code is entered, all the details appear automatically. The LEI renewal checkbox has to be checked right, and then the form completion process, payment and documents submission are followed. On successful submissions of all the above, the LEI code is renewed, and the confirmation for the same is communicated.

Conclusion

This article concludes that the LEI Code is a unique alphanumeric code with 20 characters. An LEI code is categorized into 2 Sections. Level 1 data includes entity registration, and Level 2 contains information about an entity’s ownership structure. The companies and organizations with aggregate fund-based and non-fund-based exposure of credit over Rs 50 Crore must obtain Legal Entity Identifier.