What is an LEI number?
The LEI (Legal Entity Identifier) is an international 20-character alphanumeric code, also known as an LEI number, that uniquely identifies legal entities involved in financial transactions. The LEI number helps make financial markets more transparent and data more reliable.
LEI numbers are used by banks and stockbrokers, and they are needed for securities transactions and financial market reporting. Put simply, an LEI number is a company’s international identifier in the financial world. Unlike a national registration number, such as an Indian company’s Corporate Identification Number (CIN), the LEI number is used worldwide and is linked to verified data in the public GLEIF database.
Why was the LEI system created?
The idea for the LEI system arose in response to the 2008 global financial crisis. During the crisis, it was difficult for regulators and banks to assess accurately how closely financial institutions and companies were interconnected. This made it hard to assess and manage risks.
To solve this problem, the G20 countries supported the creation of a single global system for identifying legal entities. The result was the LEI system, which makes it possible to identify counterparties around the world in a standardised and transparent way.
The LEI number helps avoid confusion caused by similar company names, different countries’ registers and complex group structures. A counterparty can be identified by a single international identifier rather than only by its name or local registration number.
Who manages the LEI system?
The LEI system is coordinated by the Global Legal Entity Identifier Foundation (GLEIF). GLEIF is an international non-profit foundation whose task is to oversee and develop the global LEI system.
GLEIF itself does not issue LEI numbers to companies. They are issued by GLEIF-accredited LEI issuers, known as LOUs. The issuers verify the company’s data, issue the LEI number and are responsible for keeping the data up to date in the GLEIF database.
LEI Universal acts as a Registration Agent and helps companies apply for and renew LEI numbers, and transfer an LEI number that is currently managed by another service provider.
Who needs an LEI number?
An LEI number is needed by a legal entity that operates in financial markets, or whenever a company must be uniquely identified in a financial transaction or report.
The requirements depend on the transaction and the applicable rules. An LEI may be needed for:
- Securities trading — the company buys or sells shares, bonds, exchange-traded funds or other financial instruments.
- Regulatory reporting — the company’s transactions must be reported to financial regulators, for example under the requirements of the Reserve Bank of India (RBI) or SEBI.
- Derivatives transactions — the company uses swaps, futures, options or other derivatives.
- A financial institution’s requirement — a bank, stockbroker or other financial service provider needs the LEI number to identify a client or counterparty.
Private individuals do not use an LEI for personal transactions. An eligible registered sole proprietorship may obtain one. The LEI number is intended for legal entities and certain legal structures, such as companies, investment funds, trusts and societies.
In India, LEI requirements also apply to certain large-value payments, cross-border transactions and non-individual borrowers. Ask your bank which RBI or SEBI requirement applies to your organisation and transaction.
Why is an LEI number important?
The main purpose of the LEI number is to increase the transparency and security of financial markets. Because the data linked to an LEI number can be checked in a public register, the parties to a financial transaction can be identified unambiguously.
This helps banks, stockbrokers, regulators and business partners understand which legal entity they are dealing with. The LEI number also reduces the risk of another company’s data being used in a report or transaction.
For a company, an LEI number is also useful when building new relationships with clients and partners. A valid LEI number lets a bank or financial partner check the company’s details quickly and can speed up processes.
The LEI number is therefore not only a legal obligation but also a practical verification tool: banks, regulators and business partners can freely view and check the company’s details.
What is the structure of an LEI number?
An LEI number consists of 20 characters. For example, it might look like this:
The LEI number itself does not reveal the company’s name, country or line of business. These details are linked to the LEI record in the public GLEIF database.
Applying for an LEI number
With LEI Universal, you can apply for an LEI number online in just a few simple steps.
- Choose a package and fill in the application form. Enter the official name, registration number and registered address. Use the MCA details and CIN for a company, or the LLPIN for an LLP. Other eligible organisations should use their own official registration details.
- Check the company details. Review the name, registration number, address and contact details. If necessary, add the parent company’s details or select the appropriate exception reason.
- Submit the application and pay. Sign the authorisation if requested, then pay for your order at checkout.
- The LEI number is sent by email. Once the data has been checked, the LEI number is issued and sent to the email address given in the application.
If the data is correct, most LEI numbers are issued on the same business day. If parent company data has to be checked or additional documents requested after the application has been submitted, processing the order may take longer.
Read more: How to apply for an LEI number
Renewing an LEI number
The data linked to an LEI number must be confirmed once a year. The purpose of renewal is to make sure that the company’s data in the GLEIF database is current and reliable.
If the LEI number is not renewed on time, its status in the GLEIF database changes to LAPSED. The number itself stays the same and can be renewed later.
LEI Universal offers 1, 3 and 5-year packages. If you choose a multi-year package, we take care of the annual renewal throughout the chosen period.
We will remind you 60 days before your LEI number expires.
Read more: How to renew an LEI number
Frequently asked questions
Can a company have more than one LEI number?
No. Each legal entity can have only one LEI number. If it already has one, the existing number can be renewed or transferred from another service provider.
Who needs an LEI number?
Legal entities need an LEI number when they carry out reportable financial transactions, for example when trading shares, bonds or derivatives.
Can a private individual get an LEI number?
Private individuals do not use an LEI for personal transactions. Eligible registered sole proprietorships can obtain one. Ask your bank whether your business needs an LEI.
What happens if my LEI number has not been renewed?
If your bank requires an active LEI registration for the intended transaction, renew it before proceeding. Ask your bank which requirement applies. We send our customers a reminder 60 days before the renewal date.
