LEI code - what is it?

The International Legal Entity Identifier (LEI) is an identifier consisting of 20 characters (letters and numbers without spaces, hyphens and punctuation marks) according to ICO 17442 standards, created by the International Organization for Standardization. The initiators of the emergence and implementation of such codes are the states of the Big Twenty (G20).

The purpose of its appearance:

implementation of uniform global norms for checking financial market participants
exchange of information between participants
increased transparency of information about participants
facilitating the search, identification and verification of contractors
analysis, verification and regulation of risks in financial markets by regulators.

The Public LEI Database is a kind of worldwide free directory and open resource for obtaining information about businesses around the world.

Photo 1 - Obtaining an International Legal Entity Identifier (LEI)

WHAT YOU NEED THE LEI CODE

The LEI number is unique and is used to identify legal entities participating in global financial markets. The number makes it possible to quickly recognize and verify contractors/partners involved in a financial transaction or working with financial instruments around the world. Each company is assigned one code (identifier). The business registration number issued by the state Registry of Companies does not replace the LEI code, and vice versa.

The LEI number is requested by financial organizations/banking institutions in order to identify clients when performing any actions with financial instruments and preparing reports to their regulator. From the beginning of 2018, the code is mandatory for all companies that carry out transactions with financial instruments on the trading floors of the European Economic Area. If the client does not have an LEI code, the banking institution will refuse to perform the operation.

HOW TO GET THE LEI CODE

In order to obtain a code, one must contact an accredited local operating unit (LOU, as the LEI issuing firms are called), which is granted the right to assign, verify and renew codes. This may not necessarily be an organization in the jurisdiction where the legal entity is registered, it is allowed to apply to any convenient accredited unit around the world. The Global Legal Entity Identifier Foundation (GLEIF) accredits international organizations.

To obtain the code, ensure that you provide accurate company reference information. The accredited firm verifies this data using reliable local sources, such as the state Registry of Companies, and assigns an LEI that complies with the standards. Once a company has an LEI, this number, along with other information, is posted on the website of the local entity that assigned the code, and, in addition, in the unified GLEIF system. The number becomes publicly available to all interested persons in any state, at any time and absolutely free of charge.

According to the ICO 17442 standard, a legal entity must provide the following minimum required data to obtain an LEI code:

The official name of the company, indicated in the official registers, confirming this information with a registration certificate.
Country and address of registration (legal and physical address, if different), as well as supporting documents.
Information and documents on the authorized person who represents the company and signs the consent to receive the LEI code and other information.

All other information about the company that is not provided for by the ICO standard may be specified by agreement between the legal entity and the local unit that will assign the LEI. Information about the parent structures of LEI holders and their relationships with subsidiaries is also subject to disclosure.

LEI code can be obtained for any company, no matter what jurisdiction it is registered in (offshore jurisdictions, Europe, Asia, America and other states).

Individuals do not need to obtain an LEI code.

Photo 2 - Obtaining an International Legal Entity Identifier (LEI)

VERIFICATION (RENEWAL) LEI CODE

The LEI code is obtained only once, but in order to maintain the overall system in the appropriate state, it must be renewed (verified) every year. The verification of reference data for the company should be initiated by the owner of the code, and the reconciliation itself is carried out by the local operating unit.

If the company does not renew within the due date, the status of the code in the system will be displayed as passed. This may be of interest to regulators and supervisory authorities, as well as cause doubt and mistrust among counterparties with whom it is planned to conclude agreements.