Mandatory Legal Entity Identifier (LEI) – for Listed Company

SEBI Circular Introduces Legal Entity Identifier (LEI) Requirement for Issuers of Non-Convertible Securities, Securitized Debt Instruments, and Security Receipts

On May 3, 2023, the Securities and Exchange Board of India (SEBI) issued Circular No. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2023/64, announcing the introduction of the Legal Entity Identifier (LEI) requirement for issuers who have listed or plan to list non-convertible securities, securitized debt instruments, and security receipts.

Understanding the LEI Code

The Legal Entity Identifier (LEI) is a unique global reference number assigned to every legal entity or structure participating in financial transactions across jurisdictions.

LEIs will be assigned to various legal identities, including but not limited to intermediary institutions, banks, mutual funds, partnership companies, trusts, holdings, special purpose vehicles, asset management companies, and other institutions involved in financial transactions.

The LEI will be granted upon application by the legal entity, following a thorough validation of the provided data. For organizations, the LEI will serve multiple purposes:

1. Proof of identity for a financial entity
2. Facilitation of compliance with regulatory requirements
3. Streamlining transaction reporting to Trade Repositories

Understanding the LEI Code Structure

The structure of the global LEI is determined by ISO Standard 17442, taking into account stipulations by the Financial Stability Board (FSB).

Mandatory Introduction of LEI for Listed Non-Convertible Securities and Securitized Debt Instruments

The SEBI circular mandates the introduction of LEI for transacting in listed non-convertible securities and issuers transacting in listed securitized debt instruments and security receipts.

Timeline to obtain LEI code

1. Issuers with outstanding listed non-convertible securities as of August 31, 2023, must obtain and report the LEI code in the Centralized Database of corporate bonds by September 1, 2023.
2. Issuers with outstanding listed securitized debt instruments and security receipts as of August 31, 2023, must obtain and report the LEI code to the Depository(ies) by September 1, 2023.
3. Issuers intending to issue and list non-convertible securities on or after September 1, 2023, must report their LEI code in the Centralized Database of corporate bonds at the time of allotment of the ISIN.
4. Issuers planning to issue and list securitized debt instruments and security receipts on or after September 1, 2023, must report their LEI code to the Depositories at the time of allotment of the ISIN.

Process for Obtaining LEI

Entities can obtain the LEI code from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF).

In India, the LEI code can be obtained from Legal Entity Identifier India Ltd. (LEIIL), a subsidiary of the Clearing Corporation of India Limited (CCIL). LEIIL has been recognized by the Reserve Bank of India as the issuer of LEI under the Payment and Settlement Systems Act, 2007. It is also accredited by the GLEIF as the LOU in India for the issuance and management of LEI codes.

Documents Required for Obtaining LEI Code

To obtain an LEI code, entities must provide the following documents:

1. Certificate of Incorporation/Registration Certificate
2. PAN Card proof
3. Undertaking-cum-Indemnity as per the format specified by LEIL
4. Audited Financial Statements
5. Board Resolution as per the format specified by LEIL OR a certified true copy

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Disclaimer:– The above article is drafted on the basis of Notifications and circulars issued by RBI / SEBI from time to  time which are mandatory to comply with. At the time of making compliances, there are other important aspects also which are required to be considered while preparing them as cases varies and depend upon merits of the company’s profile. Hence, the professional/(s) who are involved should consider the whole case. The author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.

[Author – CS Kanchan Gupta, Practising Company Secretary and Lawyer in Delhi; provides varied array of services including Start-ups, Secretarial, Legal, Intellectual property, taxation, Audit, GST, Book keeping and other ancillary advisory service and can be reached at email id:-info@sarasjurislaw.com or +91 8383083477]