Introduction about LEI:
Legal Entity Identifier India Limited is a registered company having CIN U74900MH2015PLC268921 and is a Wholly Owned Subsidiary of The Clearing Corporation of India Ltd.
LEI acts as a Local Operating Unit (LOU) for issuing globally compatible Legal Entity Identifiers in India
“LEIL has been recognized by the Reserve Bank of India as an “Issuer” of Legal Entity Identifiers under the Payment and Settlement Systems Act 2007 (as amended in 2015).” LEIL has been Accredited by the Global Legal Entity Identifier Foundation (GLEIF) as a Local Operation Unit (LOU) for the issuance and management of LEI’s.
Requirement of Legal Entity Identifier for my organization
The Legal Entity Identifier (LEI) is a global reference number that uniquely identifies every legal entity or structure that is a party to a financial transaction, in any jurisdiction.
LEIL will assign LEIs to any legal identity including but not limited to all intermediary institutions, banks, mutual funds, partnership companies, trusts, holdings, special purpose vehicles, asset management companies, and all other institutions being parties to financial transactions.
LEI will be assigned on application from the legal entity and after due validation of data. For the organization, LEI will
√ Serve as a proof of identity for a financial entity
√ Help to abide by regulatory requirements
√ Facilitate transaction reporting to Trade Repositories
What is LEI Code?
The structure of the global LEI is determined in detail by ISO Standard 17442 and takes into account Financial Stability Board (FSB) stipulations.
Figure 1 Bifurcation of LEI Code
General FAQ’s about LEI from Stakeholders
Q1: This RBI Mandate states that LEI Number is required for all payment transactions of value INR 50 crore and above undertaken. Is this for one single transaction or a cumulative amount for one financial year?
Solution: The circular refers to any single transaction done through RTGS/NEFT of value 50 crores or above during the year.
Q2: For which type of Instrument of Payment will be considered for the circular. (E.g. FX Payments, Money Market Payments, Vendor Payments, Inter-company payments or any other. If any, please specify)
Solution: In case you are using RTGS/NEFT for carrying out transactions of value 50 crores or above for FX Payments, Money Market Payments, Vendor Payments, Inter-company payments, or any other, LEI number would be required.
Q3: I have obtained LEI for my company. Do I have to apply for LEI number again?
Solution: No, LEI number is a globally unique number assigned to your company. Hence, the same LEI number is also valid for credit and non-derivatives markets.
Q4. How much time does it take to process an LEI application?
Solution: The Department generally take 1-2 working days to review after receipt /upload of the complete application form and payment.
Q5: What is an LEI?
Solution: The Legal Entity Identifier (LEI) initiative is designed to create a global reference data system that uniquely identifies every legal entity, in any jurisdiction, that is party to a financial transaction. More specifically, LEI is a unique 20 digit code that is assigned to a legal entity.
Q6: What is the purpose of LEI?
Solution: The global LEI system (GLEIS) has been set up by regulatory authorities [including G20 and the Financial Stability Board (FSB)] to address the global financial crisis. The LEI is designed to enable the identification and linking of parties to financial transactions in order to manage counterparty risk. Its goal is to help improve the measuring and monitoring of systemic risk and support more cost-effective compliance with regulatory reporting requirements.
Q7: Who needs to apply for LEI codes?
Solution: An entity registered in India needs to apply for LEI code from time to time.
The list of entities eligible to apply for LEI codes are but not limited to Sole Proprietorships, Limited Liability Partnerships, Partnership Firms, Trusts, Private Limited Companies, Public Limited Companies, Government Companies, One Person Company, Insurance Companies, Housing Finance Companies, Non-Banking Finance Companies, Non profit companies, Special Purpose Vehicles – ARC Trusts, Special Purpose Vehicles – Companies, SPV – Partnership Firms, SPV – Co-operative Societies or Multistate Co-operative Societies Mutual Fund, Mutual Funds-Sub Scheme, Pension Fund, pension Fund Sub-Scheme, Alternative Investment Fund (AIF), AIF- Sub Scheme, Nationalised Banks, Scheduled Urban Cooperative Bank, RRBs, Payment Banks, Banking Companies – Others, Stand Alone Primary Dealers, Public Financial Institutions, Unlimited Companies, Cooperative Societies or Multistate Cooperative Societies, Government Organizations, Companies Limited by Guarantee, Provident/Superannuation/Gratuity/Insurance Fund, HUF, etc. Other entities as may be specified from time to time.
Q8: Can an individual apply for LEI?
Solution: No, an individual acting in a natural capacity is currently out of scope to apply for LEI.
Q9: My company headquarters is moving abroad. Do I need to apply for new LEI?
Solution: No, an issued LEI retains its validity even if the entity moves into the area of responsibility of a different issuing agency as long as the legal entity remains the same.
Q10: What are the documents required to be submitted to LOU for processing LEI applications?
Solution. The legal entity will have to upload the soft copy of documents/submit via courier physical documents which include but are not limited to:
- Certificate of Incorporation/Registration Certificate
- PAN Card proof
- Undertaking –cum-Indemnity as per the format specified by LEIL1
- Audited Financial Statements
- Board Resolution as per the format specified by LEIL OR A certified true copy of the general board resolution or general power of attorney will be accepted if the legal entity commits to submit a fresh board resolution in the format as prescribed by LEIL when the next Board Meeting is held subsequently.
Q11: What is the validity period of LEI?
Solution: An LEI is valid for one year from the date of issuance/last renewal date.
Q12: What happens if I don’t renew my LEI?
Solution: LEI shall be valid for a term of one year after assignment or renewal. It shall be the duty of the entity to apply for renewal of LEI before the expiry of the validity of the LEI. The status of your LEI will change to ‘LAPSED’ on the next renewal date.
Q13: What is the challan amount of registration and renewal of LEI?
Solution: The final amount after GST is Rs. 5310/ and for renewal, the amount is Rs. 3540/-
For more queries mail at csvikashverma@yahoo.com
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A good and well covered article