Since January 2018, all companies that have, or will have, financial investments need to have an identification number known Search LEI code.

What is the LEI code?

The LEI code, which stands for Legal Entity Identifier, is an international alphanumeric system that only identifies legal entities and is intended for those companies and organizations that are part of a financial contract.

This identification number emerged to better assess and manage the risk; In this way, a more complete and precise vision of the risks assumed by each party is offered and the market is given greater transparency. With this, the G20 tries to avoid global economic crises.

This global code is composed of 20 characters and is unique, permanent and transmissible for each entity; Therefore, it collects all the legal information of the companies that own it. This standard format is based on the specifications of ISO 17442 and is characterized by always having the same alphanumeric structure.

Prefix - reserved digits - random alphanumeric code - control digits

9598 (*) is the prefix assigned to the Spanish LOU.

What is it for?

The function of the LEI code is to identify the legal entities that make up a financial transaction; In this way, it meets the information requirements established by Spanish legislation.

With this, the LEI code allows regulators to know better the possible financial risks, to try to make a previous arrest.

What entities are likely to have LEI code?

Below we show you the entities that usually need LEI code.

• Banks and financial institutions.
• Companies that issue stocks, securities and debts.
• Publicly traded businesses.
• Companies that market their shares or their debt.
• Investment Methods
• Businesses supervised by a financial regulator.
• Counterpart companies to carry out financial transactions.

For its part, it is necessary to know that branches cannot be assigned an LEI code. In the case of not having this identification number, the company cannot execute any instructed operation.

When should I have the LEI?

In the past, the LEI code was not necessary, but as of January 3, 2018, all legal entities must have an identification number throughout Europe. This directive on financial instrument markets, known as Mifid II requires legal persons to have this code.

The problem that arose before the implementation of the LEI code in a mandatory way is that many entities had not requested it. Therefore, two key dates were established that all companies should know.

November 1, 2017: companies that operate with derivatives and exchange insurance.
January 3, 2018: companies that operate with equities and fixed income.

Issuance of the LEI code

In Spain, Royal Decree 14/2013, of November 29, is responsible for issuing and managing this identification number. It is essential to have an LEI code to operate with financial markets that are governed by two regulations:

• EU Directive No. 65/2014: known as Mifid II.
• Regulation 648/2012 of the European Parliament and of the Council on over-the-counter derivatives.

For the issuance of the LEI code, it is necessary to present all the legal and registration data of the entity, the address, the contact person's data and the legal representative.

Agents involved in the LEI

Below we show you the three main agents involved in the LEI code.

• Regulatory Oversight Committee (ROC): authorities representing America, Asia-Pacific, Africa and Europe.
Spain is a full member of law through the Bank of Spain.

• Global Legal Entity Identifier Foundation (GLEIF): its function is to ensure the application of the same operations, their implementation and the use of LEI. To do this, this non-profit foundation is supervised by the ROC.

• Local Operating Units (LOU): public and private companies whose objective is to implement the LEI code locally. Its objective is to give the identifier to those entities that have requested it and records the information that appears in the code.

Who can request the LEI code? and how?

The LEI code can be requested by the legal representative of a company, or company, that has the capacity to do so.

1. LEI Global Identifier Application.

2. Delivery of the required data.

3. The digital signature of the document with a digital certificate.

4. Application form for payment to the Commercial Registry.

5. Completion of the document registration request. It can be done through the document generated by the Commercial Registry website.

6. Proof of payment transfer. At present, these initial code issuance rates mean a disbursement of 100 euros plus VAT.

In addition, the receipt of the receipt must be sent to the email and must be accompanied by these other documents:

• Application for the digitally signed LEI identifier.

• Proof of payment.

• Document registration request.

As of that moment, the LEI code is already activated and the company can have it for one year.

How is the LEI structured?

As we have said, the LEI code has a structure, of 20 digits, divided into four blocks.

First 4 digits: identifies the LOU assigned to that LEI. 9598 is the one assigned in Spain.
Next 2 digits: reserved and have a default value of 00.
Numbers 7 to 18: identify the legal entity.
Last 2 digits: they are controlled and are calculated according to the corresponding ISO.

What minimum information does it include?

Each LEI code must contain minimal information that guarantees security and the correct financial transaction. Below we show the minimum data that should appear.

• Official Name

• Legal address.

• The real address of the company's headquarters.

• Country or region of legal jurisdiction.

• Social entity.

• Entity registration number and registration name.

• LEI code of the local LOU.

• Date of registration of the LEI code.

• Last update of the data.

• Date and reason for termination of the LEI code.

Is it immediate?

Unfortunately, not. The Commercial Registry process establishes a maximum period of 15 business days, although it is usual that it does not exceed 4 business days.

Should we renew it? How is it done? Who has to do it? Is free?

The LEI code is only valid for one year, from the date of issue or the last renewal. The renewal must be done before the expiration date and must be done by the interested entity.

The renovation is very simple and you only have to update the company information and pay the fees.

It can be done by the authorized person through the Registrar's website in Spain. Once the application is completed and the renewal fee has been paid, the cost is 50 euros + VAT, an email must be sent to the Mercantile Registry with the proof of said payment.

How long is the renewal?

The LEI code is valid for one year, from the date of issue or the last renewal. If you do not request such renewal, the identification number will expire. In addition, you can check all the identification numbers issued by the Spanish LOU, and its validity, at no cost within the Registrar's own page in Spain.

Author's Bio: 

Shishir is a guest blogger, having his blogs published on various sites including Huff Post. He loves to watch documentary movies and travel across different countries to explore new places. Moreover, He is Google AdWords & Analytics certified partner having more than 9 years SEO & Digital marketing experience.)