What the LEI is
LEI stands for Legal Entity Identifier. It is an alphanumeric code of 20 characters based on the ISO 17442 standard, which identifies a legal entity taking part in financial transactions.
The system is coordinated by GLEIF (Global Legal Entity Identifier Foundation) and the codes are issued by accredited entities called LOUs (Local Operating Units). Each LEI points to a specific entity and its parent.
What it is for
The LEI makes it possible to know who is who in the markets. A bank or regulator can see, from the code, your company's legal identity, its address and its ownership structure.
It was born after the 2008 crisis to bring transparency to the financial markets. Today it is required by regulations such as MiFID II and EMIR in the European Union.
When it is mandatory
Not all companies need it. An SME that only invoices services and uses a normal current account may never come across the LEI. The requirement appears as soon as it enters regulated financial activity.
- Dealing in financial instruments (MiFID II)
- Signing derivative contracts (EMIR)
- Reporting transactions to a regulator
- Certain transfers and bank accounts
- Issuing securities or participating in funds
How to obtain it
The LEI is requested through a LOU accredited by GLEIF. You provide the company's registry documentation and, within a few days, you receive the code. The cost is around €50 to €150 a year depending on the issuer.
The code is valid for one year and has to be renewed to remain active in the global register. If it expires, it stops working for the transactions that require it.
The LEI and your subsidiary in Europe
If you operate with several companies in the EU, it is worth having the LEI ready before a bank or counterparty asks for it. It avoids a deal getting stuck on a formality that is resolved in days.
It does not replace the VAT number or the commercial register: it is an additional layer of identification, aimed at the financial system.
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