LEI, which stands for Legal Entity Identifier System, consists of a unique 20-character number or code (known as LEI code) that is issued to big corporations, organizations, funds, and other companies who participate in the global financial system. The concept, Legal Entity Identifier, revolves around the financial identity of big corporate companies that engage in global transactions. In India, the Reserve Bank of India (RBI) has made it mandatory for all legal entities (corporate companies) to be assigned an LEI. LEI ensures that the financial transactions made between different businesses remain as transparent as possible.
It is important for financial companies to obtain an LEI because doing so will not only protect huge amounts of financial transactions from risk, but also improve the financial quality and accuracy of their transactions. It is important to note that LEI cannot be obtained by any one individual. It is issued to a legal entity within the global financial system only.
Since transactions that occur between different companies (companies not just within a country but also between different countries) usually involve massive amounts of money, it becomes all the more important to have a system like LEI as it makes the identification of those legal entities instantly available in the global financial data pool. In a way, LEI acts as a global directory for financial transactions. The 2008 global financial crisis led to the formation of the Legal Identifier System.
Wondering how to obtain an LEI? Let’s discuss how a financial company can obtain an LEI and the steps that are involved in the process.
LEI can be obtained through a service provider. You can either obtain it through the Local Operating Unit (LOU) (LOU should be accredited by the Global Legal Entity Identifier System) or an LEI registration agent.
To obtain a Legal Entity Identifier (LEI), you must take the following steps.
Step 1 – Fill out the registration form
The registration form can be filled by an authorized representative of the company or by any third party the company has chosen or permitted to fill the registration form on its behalf. The applicant has to provide their contact details. The applicant will receive all the information and reminders related to LEI.
You will be required to provide information related to the entity or company like the address, the name of the director or the owner, CEO of the company.
If a parent company exists, then you have to provide their relevant information as well.
Step 2 – Documentation
You have to provide some relevant documents before submitting your application form. When you submit your LEI registration form, the data and the documents provided by you will be verified and reviewed.
Step 3 – Payment
After you submit your registration form, you can select the mode of payment method and the registration process will be completed.
LEI Registry will issue the Legal Entity Identifier to your company within 1-24 hours of submitting the form.
