LEGAL ENTITY IDENTIFIER

The Legal Entity Identifier is a global 20-character alphanumeric code for identifying legal entities. The LEI is an exclusive identifier, as each legal person is only issued a single LEI. It enables identifying legal entities participating in global financial markets for various supervisory purposes. Each LEI contains information about an entity’s ownership structure. The publicly available LEI data pool can be regarded as a global directory, which greatly enhances transparency in the global marketplace. It was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis. LEI was created as a result of the 2008 financial crisis to deliver strong organisation identity for counter-parties. LEI protect citizens during market crises by providing understanding of dependencies and risk exposure. Endorsed by the G20 and the Financial Stability Board, and regulated by Global LEI Foundation (GLEIF).

 

Structure of the LEI Code

 

The LEI code is based on four simple principles:  

1. It is a global standard.

2. Every legal entity is assigned a single unique identifier.

3. Public availability of LEI code to all users

4. A high level of data quality supports it.

 

The LEI code comprises of 20 characters and the following structure:
 

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

Who needs a Legal Entity Identifier?

 

An entity registered in India needs to apply for LEI code from time to time. The list of entities eligible to apply for LEI codes are (but not limited to) as following:

 

Sole Proprietorships Limited Liability Partnerships Partnerships Firms Trusts Private Limited Companies Public Limited Companies Government Companies One Person Companies (OPC) Insurance Companies Pension Fund Pension Fund Sub-scheme Alternative Investment Fund (AIF) AIF- Sub Scheme Nationalised Banks Scheduled Urban Cooperative Bank RRBs Payment Bank Provident/Superannuation/ Gratuity/Insurance Fund

Housing Finance Companies Non-Banking Finance Companies Non-Profit companies Special Vehicles- Trusts Special Purpose Vehicles- Companies SPV- Partnership Firms HUF SPV- Co-operative Societies or Multistate Co-operative Societies Mutual Fund Mutual Funds-Sub Scheme Banking Companies- Others Stand Alone Primary Dealers Public Financial Institutions Unlimited Companies Cooperative Societies or Multistate Cooperative Societies Government Organizations Companies Limited by Guarantee

 

• It is mandatory for corporate borrowers having aggregate fund-based and non-fund based exposure of ? 5 crore and above from any bank to obtain Legal Entity Identifier (LEI) registration.
• Legal entity identifier (LEI) is mandatory for transactions in interest rate, forex and credit derivative markets. The Reserve Bank of India (RBI) has also made LEI compulsory for companies.

Circulars related to LEI code:

 

RBI Circular for NEFT/RTGS Transactions

The circular refers that any single transaction done through RTGS/NEFT of value 50 Crore or above for FX Payments, Vendor Payments, Inter-company payments, Money Market Payments or any other, during the year require LEI number.

 

IRDAI Circular for Insurers and corporate borrowers

The IRDAI circular is applicable to both term loan borrowers and debenture issuers. Debentures, term loans as well as Bonds both would be included in computing the overall exposure that an insurer or financial institutions has to a corporate borrower either in the form of term loan or debentures or in any other form of debt.

 

RBI Circulars for Non derivatives markets and for Large borrowers

RBI circulars covers participants in non-derivative markets and borrowers of banks in a phased manner to apply for an LEI.

Non-derivative markets include Government securities markets, money markets (markets for any instruments with a maturity of one year or less) and non-derivative forex markets (transactions that settle on or before the spot date) that is cash, tom and spot transactions.

 

Link to RBI circular: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NEFT65551DCFBD1E41E6ACBD1B5D89F01329.PDF

 

Documents Required to obtain LEI code

 

One can check the documents requirement by visiting the link quoted here: https://www.ccilindia-lei.co.in/ and access the “ Downloads” tab. The checklist for the documents and their specific formats necessary for submission are available here based on the legal structure of the entity.

Fee charged by LEIL (Legal Entity Identifier India Limited)

 

• For New Registration: Rs.4500 + 810 (18% GST) = Rs.5,310
• For Renewal: Rs.3000+ 540 (18% GST) = Rs.3,540 (Renewal fees are not applicable at the time of new registration.)

 

Renewal of the LEI Code

 

The validity of LEI Code is generally one year. In order to continue the use of same LEI Code, every registered party must renew it through the portal itself. Select the option “Modify and Renewal”, any changes to this part will also need to be done by the authorised person. In the form, once the LEI Code is entered in, all the details appear automatically. Any modifications to be made shall be made. The “LEI Renewal” checkbox has to be checked right and then the same process of form completion, payment and document submission is followed. On successful submission of all the above, the LEI Code is renewed, and the confirmation of the same is received.

  

Consequences for non-registration of LEI no.

 
Borrowers who do not apply for LEI no. will be barred from availing the credit facility from banks like renewal or credit enhancement. Parent entities, subsidiaries and other associates of the entity must obtain the LEI.