The Legal Entity Identifier (LEI) is a unique code that can distinguish any corporate body. Ideally, LEI is made up of 20 characters and is founded on certain standards: First, it’s an international criterion. Second, every legal entity is allocated a unique number. Third, the code is freely accessible to every client.
The major purpose of the LEI code is to allow businesses to make financial transactions without undue threats. With that in mind, here’s what you need to know about the LEI code as a startup:
1. Benefits Of Obtaining An LEI Code
LEI is one of the most crucial documents you wouldn’t want to miss in your company. With it, you show the world that your small business is legitimate, ready for partnerships, and has a clear structure with global credibility. Additionally, you foster your authenticity, thus attracting more clients, making more profits, and eventually expanding your brand. Other advantages include:
- Improved trust and confidence in your brand’s identity: Before customers and prospects purchase your products, they’d want to ascertain that you’re a legal firm and that your goods and services are authentic. One way of proving to them is by obtaining an LEI code. This way they trust your brand more, hence giving you a competitive edge.
- International approval: LEI number is a globally recognized identification system. By acquiring it, you qualify to obtain an LEI certificate, which is accepted globally. Thus, you can transact freely in any country.
- Compliance: For you to do your business across the globe, you must have an LEI code.
- Improved market transparency
- Reduced risks related to financial transactions since you can evaluate the risks and make more enlightened decisions
- Minimized costs of data collection because you can effortlessly figure out the risks
- It’s a regulatory requirement in most jurisdictions
2. How To Apply For LEI Code
Applying for a legal entity identifier code is straightforward, quick, safe, and secure. It’s because you can do it personally online. Also, any member of your business can fill out the form. You can acquire it from the Local Operating Unit (LOU) or an LEI registration unit. To apply online:
- Visit the LEI website and navigate to the register button. To start, enter your contact information as the seeker.
- Then, fill out the data of the company in need of the LEI code. It includes details like the valid name of the legal entity as documented in the formal records, registered address, country of establishment, your country’s codes, etc.
- Next, upload your supporting documents such as incumbency certificate, partnership certificate, registry extract, and any other valid document.
- Select payment method. You can use a Debit card, bank transfer, Razorpay, or net banking.
- Finally, submit your application.
3. How To Renew LEI Code
The LEI code usually expires after one year. And it means that you have to apply for renewal; otherwise, your code becomes inactive. The renewal procedure is much simpler and won’t take much of your time. Here’s how to go about it:
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- Visit the LEI website and navigate to the renewal page. Select modify and renew.
- Enter your LEI number or your brand’s name in the required field.
- Your form will be filled in automatically from the data available in the Global Legal Entity Identifier database. You can make any edits if necessary.
- Lastly, make your payment and submit your renewal application form. Once this is successful, you’ll receive a confirmation message.
As a small business owner, you’d want to check your eligibility before beginning your application process. It ensures you don’t waste your precious time and money applying for something that’d be rejected. Ideally, you can qualify to apply for LEI if your brand is engaged in financial transactions or is it among the following entities:
- Partnership companies
- Insurance firms
- Pension fund
- Government agencies
- Non-banking funding corporations
- Limited liability company
- Single-member company
- Private limited firms
- Boundless organizations
- Institutional investors
- Public limited organizations
- Non-profit organizations
- Retail investors
- Housing finance companies
- Independent primary dealers
The list is long and may be updated from time to time, thus consider checking for the most recent list.
5. Legal Requirements
For your application to be successful, you need to submit supporting documents that validate the application. Below are some of the required documents:
- Partnership certificate
- Examined financial statements
- Official filling
- Company’s charter
- An incumbency certificate
- A letter from a lawyer
- Yearly report
- List of directors
- Any additional binding record that reaffirms needed LEI information
The LEI code is indeed beneficial to small businesses. With it, you can obtain a competitive advantage, win your client’s trust and confidence, be recognized globally, and also do business across the world. For this reason, you’d want to obtain it for your brand. But before making any application, consider getting an insight into what it entails and how to apply for it. Hopefully, the discussion above has filled you in with all you need to know about the LEI code.