A Legal Entity Identifier (LEI) is a crucial code consisting of 20 symbols that facilitates identification within the global financial system. LEIs have become mandatory for legal entities engaged in trading securities, as mandated by MiFID II and the Reserve Bank of India (RBI). In this guide, we present the checklist of mandatory documents required for registering and obtaining an LEI.
According to the Mifid (Financail Market Instruments Directive) II directive 2014/65/EL, LEI codes are mandatory for all legal entities who trade in securities. The Reserve Bank of India has mandated the use of LEIs by all companies trading in OTC markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India. Mandatory use of LEIs was phased in between August 1, 2017 and March 31, 2018, as per the RBI Notification dated June 1, 2017.
According to the MiFID II directive, LEIs are mandatory as of 3 January 2018 for all market participants with a separate legal entity that trades in securities. For example, if a company is registered in India and would like to buy local stocks then, as of 3 January 2018, it is mandatory for this company to have LEI.
The purpose of LEI codes is to make it easier to identify counterparty in financial transactions. The issuance of codes is regulated by the global umbrella organization GLEIF (Global Legal Entity Identifier Foundation)
- An LEI or Legal Entity Identifier is a unique code, consisting of 20 symbols, that allows for identification within the global financial system. An LEI code is issued to a company just once and is unique.
- The LEI code is valid for 1 year from the date of issue. The code must then be extended (via a renewal application) for the following year.
Why do we need an LEI code?
Companies that operate within jurisdictions that mandate the use of LEIs will need to obtain one before they are allowed to transact on the financial market within that jurisdiction. The RBI has mandated the use of LEIs by large corporate borrowers and legal entities operating within certain financial markets.
Annexed herewith, set of documents required for registration under LEI.
Mandatory Documents for Identity Verification
| Sr. no. | Particulars | Optional/Mandatory | Checklist (please ✔documents ready to submit to LEIL) |
| 1 | MCA Registration Certificate containing CIN number. If CIN number is not stated on the certificate, MCA Website Print signed by Company Secretary/Managing Director/Director is to be additionally provided with old MCA certificate | Mandatory | |
| 2 | Pan Card issued to the Company | Mandatory | |
| 3 | Board Resolution to trade in derivatives if not provided for in Objects or Other Objects Clause.(Optional) | Optional | |
| 4 | Authorized Official(s) Verification:
OR
|
Mandatory | |
| 5 | Audited Financial Statements of the legal entity for the last financial year or link to its website showing its financials. | Mandatory | |
| 6 | If you have holding company, please provide the following:
Audited Consolidated Financial Statements of the direct and/or ultimate parent OR Auditor’s Certificate (Please check “Legal Docs Download” Tab for the template after logging in LEIL website) |
Conditional Mandatory | |
| 7 | Undertaking –cum-Indemnity (As per the format enclosed) | Mandatory | |
| 8 | If Headquartered (Corporate) Address is different from Registered Address, please provide any one of the following:
1. Website Link 2. Annual Financial Statements – Mention Page No 3. Please mention the Headquartered Address on Company Letter Head signed by Company Secretary/Managing Director/Director |
Mandatory | |
| 9 | GST Certificate | Mandatory | |
| 10 | Shareholding pattern on company’s letterhead if not provided in the Audited Financial Statements | Mandatory |
Conclusion: Acquiring a Legal Entity Identifier (LEI) is an essential step for companies involved in trading securities, as it ensures compliance with MiFID II and RBI regulations. The unique 20-symbol code simplifies counterparty identification in financial transactions, promoting transparency and accountability in the global financial system. By following the provided checklist and submitting the mandatory documents, companies can obtain their LEI and engage in secure and compliant financial market transactions.
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