The global crises in the year 2007-08 led to the birth of the Legal Entity Identifier, or LEI, a unique 20 character code. This number will help capture financial transaction data. It will also capture details of ownership structures and will provide information on who owns whom. It operates as a directory of the parties involved in financial transactions.
The Reserve Bank of India has issued a circular prescribing entities that mandatorily need to obtain the LEI number. LEI registration will be managed by Legal Entity Identifier India Limited (LEIL), a subsidiary of Clearing Corporation of India Limited
Till recently, only those entities engaged in specialised transactions like derivative and forward deals had to obtain LEI. However, RBI has in its recent circular on this matter expanded the scope of LEI. Registration would now be required for those participating in non-derivative foreign exchange markets as well.
Businesses engaged in forex transactions of value greater than US$ 1 million (~ Rs. 7.1 Crores) will now need to obtain LEI registration. The extended due date for obtaining the registration is as follows
|Phase||Net worth of the entities||Due date|
|Phase 1||Above Rs. 10,000 million||December 31st 2019|
|Phase 2||Between Rs.2,000 million and Rs.10,000 million||December 31st 2019|
|Phase 3||Upto Rs.2,000 million||March 31st 2020|
The requirement to obtain LEI extends to non-resident entities operating in the forex market as well. Further as per the latest circular, companies with total exposure in excess of Rs. 50 crores across banks are also advised to obtain LEIs.
The following documents are required to obtain LEI registration
- Certificate of Incorporation/Registration Certificate
- PAN Card proof
- Undertaking –cum-Indemnity as per the format specified by LEIL
- Audited Financial Statements
- Board Resolution as per the format specified by LEIL
- Power of Attorney as per the format specified by LEIL
- Statutory Auditor’s Certificate as per the format specified by LEIL.
The time period to get LEI is 3-5 working days. LEI has to be renewed every year.