In the present era of corporates, credit to the advancement in technology, transactions between businesses take place at exorbitant levels and involve significantly massive amounts. As a result, businesses and financial institutions are exposed to substantial amounts of risk. The worldwide financial crisis of 2007-08 gave rise to the need for transparency in financial transactions. The fact that a significant number of corporations engaged in window dressing and the further concealment of debt that the company had previously held in order to raise more funds and attract investors indeed resulted in a catastrophe. These events are what eventually led to the need for the establishment of a system such as the Legal Entity Identifier system.
Legal Entity Identifier
The Legal Entity Identifier is a unique 20 character long alphanumeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). With the help of the LEI, essential information regarding the parties to a financial transaction can be easily referenced. It acts as a global directory that provides the much-needed transparency for the benefit of all involved, providing details of the ownership structure and associated details of the parties involved.
Structure of the LEI Code
The LEI code is not one that possesses any embedded intelligence or country codes that would give rise to confusion and complexity of the users. It is based on four simple principles:- 1. It is a global standard. 2. Every legal entity is assigned a single unique identifier.. 3. It is available publicly, free 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 character 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.
How Does One Obtain an LEI?
The LEI code can be obtained by following the steps mentioned below:-
- Document list: Log on the online portal 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.
- Self-registration on the online portal: A person must be appointed as the authorised person to look over and carry out the process of obtaining the LEI Code. A person may be appointed as an authorised person by way of a resolution, power of attorney or voluntarily, as the case may be. It is only this authorised user that has the permission to create an account, providing his official email id and proceeding to fill up the online form. Authorised persons include:-
- Primary/Main user who submits the online application form. – Authorised User
- Name and email id of the authorised officials named in the online form.
- Secondary User – Name and email id of the secondary authorised officials named in the online form.
- The LEI registration form consists of 5 pages in total, including the payment gateway.
- Company Information Page: All the basic details of the company are entered on this particular page.
- Holding Company Page (Direct Parent Information Page): Details of the parent company are to be filled in here.
- Ultimate Parent Page: Where the company is a step-down subsidiary, along with the parent’s details, the ultimate parent’s details are also to be provided.
- Payment Page: The payment for the form is to be made once it is complete.
- Upload Page: The necessary documents are uploaded on this page.Once the form is filled, the payment page offers the option to either make the payment online immediately or to choose the option of a demand draft. If any of the online payment options are chosen, following which the “Save and Submit” option is selected, once the payment is received by the Legal Entity Identifier India Limited (LEIL), a reference number is generated, which becomes key in any future communication between the parties. In addition to the reference number, an email is also sent, detailing the list of documents to be submitted to the LEIL. If the demand draft option is selected, following which the “Save and Submit” option is selected, the reference number and email are generated immediately.
- Submission of the documents: The applicant entity will have to upload all the necessary documents mentioned in the email. The total size of the uploaded documents should be 40MB. If the upload is unsuccessful, then the documents may be couriered to the following address:-
Legal Entity Identifier India Limited (LEIL) (The Clearing Corporation of India Ltd.) CCIL Bhavan, 3rd Floor, S. K. Bole Road, Dadar West Mumbai – 400028
- Verification process: Once the documents are uploaded or sent physically, they will be verified by the LEIL along with the application form. If necessary, the LEIL may ask for additional documents as well. The applicant entity may also be directed to make changes in the application form online by the LEIL.
- Issue of LEI Code: The LEI code will be issued on the successful submission and verification of the form and the related documents. The LEI code will be sent in an email to the entity, and this code must be provided to the banks.
Renewal of the LEI Code
An LEI Code is generally valid for one year. In order to continue to use the code, it must be renewed through an application form. This can be found on the same online portal; the only difference this time around is to select the option “Modify and Renewal” and not the “Register” option. Again, any changes to this part will also need the authorised person to do so. 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.
Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.
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