What is the LEI number?

LEI, which stands for Legal Entity Identifier, is a unique identification code / number issued to companies that participate in financial transactions within the global financial system. This is a 20-character number that is issued to businesses so that their identity and financial transactions are transparent globally.

Financial transactions between different companies and entities (these transactions occur not only within the country but also between different countries) are likely to be risky because they involve a huge amount. The LEI code not only makes it easier to identify the participants (companies) involved in the financial transaction, but also helps to manage the risk associated with it.

LEI code structure - What is the LEI number picture
Created by Market Business News using material from Wikipedia.

In India, the Reserve Bank of India (RBI) has made it compulsory for every company to issue a LEI number. The LEI number cannot be issued to an individual. It is always issued to a non-individual entity; in other words, it is issued to an organization, fund, corporate borrowers or any other legal entity that engages in financial transactions. Local Operational Units (LOU) are responsible for issuing globally compatible LEI codes or LEI numbers to different market players (companies).

These LOUs must be accredited by the Global Legal Entity Identifier Foundation (GLEIF). In India, the LEI code can be obtained from Legal Entity Identifier India Ltd (LEIIL)

The LEI has become an essential component for global financial transactions as this system (LEI system) enables clear identification of legal entities on a globally accessible database and improves the quality and accuracy of financial data. All financial companies are required to have an LEI if they wish to participate in financial transactions.

How to get an LEI?

The LEI can be obtained from the local business unit or from service providers such as LEI registrars. An authorized user representing the company must create an account and complete the online registration form. This form can also be completed by a third party service provider (LEI registrar) on behalf of the company.

The authorized user will need to provide their contact details and official email ID. Other details include all the basic details of the business, such as company name, company address, name and contact details of business owners, directors, CEO, etc. The authorized user must provide all of this information in the request form. The applicant will also need to provide all relevant details related to their parent company (only if it exists)

After providing all the relevant details, the authorized user will need to provide certain documents and then select the payment method, after which the registration process will be completed. After submitting the application form, the local business unit will verify and review the documents submitted by the authorized user.

The respective authorities will assign the legal entity identifier to your business within 24 hours of submitting the form.

The LEI is a useful technological tool for companies if they wish to protect their financial investments. It also brings transparency in financial transactions.