Several global financial institutions and regulatory bodies came together to lay the foundation of the legal entity identifier or LEI as it is popularly known. As the name suggests, it is an identity for any legal entity, be it a private company or a government-owned company. Thus, any company which wishes to carry on trade and receive or send payments to other corporations needs to have a LEI to function. Simply put is a code that consists of a combination of numbers and alphabets, and it helps to uniquely identify an entity that either receives or sends money to the global financial system.
How To Obtain The LEI Code
If you own a company, then you can register your company to get an LEI code.
The LEI is nothing but a code or identity. This code is a part of a global database that is maintained by a global organization known as the global legal entity identifier foundation. It was founded under the auspices of the financial stability board. The financial stability board is an international grouping that aims to maintain the global financial system’s stability.
However, the global legal entity identified foundation or GLEIF itself does not issue any identifier to any company. It only maintains the database, and companies need to go to a local operating unit (LOU) or registration agents who help generate the unique alphanumeric identifiers and help in their timely renewal. So if you wish to register your company or renew its existing alphanumeric identifier, you can go to www.leicertificate.org.
When Does An LEI Lapse And What To Do About It
Source: financemart.in
The Validity For The Identifier Is One Year
Once you register your company under the global system of legal entity identification, the registration remains valid for a period of one year from the date of registration. However, if you are not sure if your registration has lapsed, then you should go and visit the global databases maintained by the GLEIF. You have to search for your code, and if the database shows that it has lapsed, then it is time for you to renew the code.
It is essential to renew the code after it has lapsed if you want to continue financial transactions in the global financial market. Most local operating units keep track of their client’s renewal deadlines. So if your identifier is about to get lapsed, then you are very likely to receive a reminder from the organization that helped to register your company in the beginning.
When you renew your code, all the information about your company remains the same. Even the code remains unchanged. In fact, most of the data gets pre-filled using the previous year’s data in the database. However, if some details about a company have changed, then that detail can be entered into the global database.
You Do Not Need To Get A New LEI
Source: xbrl.org
You do not need to get a new LEI after the lapse of the old code. You only have to ask the LOU or the registration agent to renew the code. The LEI is a global identity, and if you shift base to a new location, then also you do not need to get a new LEI. The code is globally valid, and it is useful irrespective of your country of residence or the country of operation of your business.
You can seemlessly transfer your LEI from one LOU to another if you shift to another country. This makes it easy for you to update changes and coordinate with a LOU located near your place of residence.
Also, if you have to make any changes in the details of the company, you need not get a new identifier. The details of a company, like the managing directors, area of operation etc. can be changed at the time of renewal. However, the LOU will not take any responsibility for the automatic change of details. You will have to inform the LOU in advance so that they can make the necessary changes.
The alphanumeric identifier is publicly visible to all. It is a public good that can be viewed free of cost. So the identifier need not be kept a secret, like the PIN code of your credit and debit card. Since the number is visible to all, there is no threat that the number will get stolen and misused. As your unique identifier cannot get stolen, there will be no need to get a new one as in the case of stolen debit and credit card PINs.
Moreover, any changes in the regulation of the LEI or the way in which the renewal has to happen are duly informed by the LOUs. It is always a good practice to give your latest and valid contact details to your LOU. If they have your latest contact details, they will inform you about all the necessary updates and the changes that you need to make at the time of renewal.
Also, a third party can get the initial registration and yearly renewal is done on your behalf. Thus, if you are a busy person who has many companies, you can engage an employee to take care of yearly renewals. In this case, your identifier will not lapse, and there will be no question of getting a new identifier for your company.
Source: leiworldwide.com
Conclusion
The idea of a legal entity identifier originated in the group of 20 or G20 meetings were the largest economies of the world wanted to make sure that global financial transactions are run smoothly. The process of registering and renewing has been made extremely simple.
However, the renewal must happen annually, but most LOUs have the facility of five-year contracts. Under the five-year contract, the LOUs will automatically renew the identifier at the end of each year in the five-year period. These five-year contracts are convenient and affordable as the LOUs offer deep discounts for long-term contracts. Some LOUs in the US offer five-year contracts for fifty dollars, exclusive of taxes.
