When your company or business is in the process of expanding globally, you need to be familiar with the process of Legal Entity Identifier code registration. The Legal Entity Identifier (LEI) is a code composed of 20 digits that is unique to a legal entity or company and serves as its identity and reference information when it participates in global financial markets. Other companies and interested parties can obtain essential information about your company, such as your company name, entity type, and address. Thus, your company needs to establish its identity by registering an LEI code.

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Read on as we share some essential information you need to know about LEI.

LEI Data Is Classified Into Two Sections

Whichever country your company operates in, it is composed of two standard sections: Level 1 and Level 2. As a historical backgrounder, the United States and the European Union (EU) were the first to adopt LEIs in financial reporting. Spain is a member of the EU, and their online solicitud lei or LEI request or application format also follows that same standard, having Level 1 (who’s who) and Level 2 (who owns whom) classifications. Level 1 includes basic entity registration information such as legal name, address, place of registration, registration number, etc. Level 2 includes information about the ownership structure of a company. It helps determine whether the company is a branch or owned by a parent company. These pieces of information are essential in promoting transparency in the global marketplace.

You Need To Provide Documentation for LEI Application

LEI registration is not just limited to applying in a company’s own country but also in any LEI issuing organization that is qualified and accredited to validate LEIs within its authorized jurisdiction. LEI issuers are also known as Local Operating Units (LOUs), and they are the primary organizations that legal entities approach for obtaining an LEI. Only organizations accredited by the Global Legal Entity Identifier Foundation (GLEIF) are authorized to process LEI registration, issue LEIs, renew LEIs, and provide other related services. Different countries and LOUs have different requirements for documents need in an LEI application, but the common requirements include one or several of the following documents: 

  • Certificate of Incorporation
  • Articles of Association or Memorandum of Association
  • Certificate of Incumbency
  • Company Registry Exact
  • Power of Attorney or legal letter

Other forms of documentation that may be required in your LEI application are annual reports, audited accounts, Register of Directors, and other legally recognized or binding documents that can confirm or validate the required LEI data.

LEI is Based on the ISO Standard 17442

According to the International Organization for Standardization (ISO), legal entities can broadly include parties or organizations that can legally perform financial transactions or independently enter into legal contracts in their jurisdiction. Companies, businesses, governmental organizations, and supranational organizations are included in this classification but natural persons are excluded. Also stipulated in this standard is that any legal entity that enters into a financial transaction is eligible for an LEI.

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As the global marketplace is growing and becoming more intricate, there is a need for clear and unique identification of legal entities that conduct financial transactions with each other. This move is setting the stage for a global identifier system where LEI is poised to become one of the most important identifiers. For businesses across the globe, this is a key step in achieving transparency and financial stability.

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