LEI number, which stands for Legal Entity Identifier, is a code or a number issued to different legal entities (companies, organisations, corporations) who engage in financial transactions repeatedly. The code issued to companies is a standard 20-digit numeric code. This code is unique to each company because it is linked to some key information related to that particular legal entity or company.
Concept of LEI
The whole concept of legal entity identifier revolves around the identity of big corporations and companies. In India, the Reserve Bank of India has made LEI code mandatory for all market participants or companies that operate within the nation. Other countries like the United States and European countries have also made LEI mandatory in their nation. The LEI system helps in the identification of companies that exist within the global financial system. The purpose of the legal entity identifier system is to improve the quality of the financial data as well as to ensure better risk management. The legal entities that are issued an LEI can be identified on a globally accessible financial database.
The LEI system was developed in 2011. Only legal entities can obtain a Legal Entity Identifier. Legal entities include organizations, companies, large corporations, pension funds, government entities, et cetera. The LEIs are issued by the Local Operating Units or the LOUs. The LOUs are usually accredited by the Global Legal Entity Identifier Foundation (GLEIF). The Global Legal Entity Identifier Foundation is primarily responsible for monitoring the work of each Local Operating Unit (LOU). It is also responsible for maintaining the integrity of the LEI system.
Is it really necessary?
Thus, all financial companies are required to have an LEI in order to engage in financial transactions so that they can be identified on a global scale. The LEI system also allows the financial transactions to be as transparent as possible. The financial transactions within the LEI system can also be tracked which makes the system extremely safe and helps avoid potential risks associated with transactions.
How to get LEI?
To obtain an LEI, an authorized representative of the company must fill the application form or the registration form for LEI. LEI registration form can also be completed by third-party agents like LEI registration agents. The validity period of an LEI is exactly one year. After that, your company has to renew the LEI. LEI has to be renewed every year if your company wants to keep engaging in financial transactions. Upon renewal, your LEI code remains the same. It won’t change even if your company changes your Local Operating Unit. The code remains the same even then.
To conduct an LEI number search, go to GLEIF LEI Look Up and click on LEI Search button. LEI number search contains all the information related to LEI. You can also check the current status of your company’s LEI such as the validity period of your LEI, the renewal date of LEI using this option. GLEIF search tool is the official search tool to conduct LEI number search.