Who needs a LEI?
A LEI (Legal Entity Identifier) is required for many legal entities that carry out financial transactions, issue securities, or need to be identified in a regulatory context. In practice, any company, fund or legal structure involved in financial markets may be required to obtain a LEI code.
The LEI is a unique 20-character alphanumeric identifier used to clearly identify a legal entity worldwide. It is used in particular for reporting obligations, transactions in financial instruments, and relationships with banks, brokers, custodians and market authorities.
Table of contents
- Who needs a LEI?
- Table of contents
- What is a LEI?
- Which entities need a LEI?
- 1. Commercial companies
- 2. Financial institutions
- 3. Investment funds
- 4. Issuers of financial securities
- 5. SPVs, holding companies and investment vehicles
- 6. Public entities and non-profit organizations
- When is a LEI mandatory?
- Do private companies need a LEI?
- Who generally does not need a LEI?
- Why obtain a LEI voluntarily?
- What are the risks of not having a LEI?
- How to know if your entity needs a LEI
- How to obtain a LEI?
- Obtain a LEI quickly
- Conclusion
What is a LEI?
The LEI, or Legal Entity Identifier, is an international identifier assigned to legal entities participating in financial transactions.
It links an entity to verified reference data, including:
- its legal name;
- its registered address;
- its country of incorporation;
- its registration number;
- certain information relating to its ownership or control structure.
The LEI system is coordinated globally by the GLEIF (Global Legal Entity Identifier Foundation). The LEI is a unique 20-character code that provides access to clear and unique identification information about a legal entity.
Which entities need a LEI?
The need for a LEI mainly depends on two criteria:
- the legal nature of the entity;
- the financial transactions it carries out.
The following entities are most frequently concerned.
1. Commercial companies
A company may need a LEI when it participates in structured or regulated financial transactions.
This may include:
- public limited companies;
- simplified joint-stock companies;
- limited liability companies;
- listed companies;
- private companies issuing securities;
- holding companies;
- group subsidiaries;
- companies carrying out transactions in financial instruments.
A commercial company may in particular need to obtain a LEI if it wishes to buy or sell securities, issue bonds, open a securities account, deal with a broker, or carry out certain reportable transactions.
2. Financial institutions
Financial institutions are among the entities most directly concerned by the LEI.
This includes in particular:
- banks;
- investment firms;
- asset management companies;
- insurance companies;
- brokers;
- payment institutions;
- electronic money institutions;
- custodians and depositaries.
In the European Union, the requirements introduced by MiFID II and MiFIR have significantly reinforced the use of the LEI to identify clients and counterparties in financial transactions. This logic is often summarized by the “No LEI, No Trade” rule in the context of MiFID II / MiFIR transaction reporting.
3. Investment funds
Investment funds very often need a LEI, either at the level of the fund itself, the management company, or both.
This may include:
- UCITS;
- AIFs;
- professional funds;
- real estate funds;
- private equity funds;
- debt funds;
- securitization vehicles;
- pension funds;
- fund compartments, where they are separately identified.
A fund may need its own LEI when it is treated as a reporting entity or as a distinct counterparty in a financial transaction.
4. Issuers of financial securities
An entity that issues financial securities may be required to obtain a LEI.
This includes, in particular, issues of:
- shares;
- bonds;
- debt securities;
- complex financial instruments;
- units or shares of funds;
- securities admitted to settlement and delivery systems.
In practice, the LEI may be requested by financial intermediaries, custodians, market platforms, national numbering agencies or competent authorities.
5. SPVs, holding companies and investment vehicles
Vehicles dedicated to a specific transaction are often concerned by the LEI.
These may include:
- SPVs;
- acquisition holding companies;
- club deal vehicles;
- project companies;
- securitization structures;
- financing vehicles;
- companies created to hold a financial or real estate asset.
Even when a vehicle is not listed, it may need to obtain a LEI if it participates in a financial transaction or needs to be identified by a bank, custodian, institutional investor or authority.
6. Public entities and non-profit organizations
The LEI does not only apply to commercial companies.
Certain public or non-profit entities may also be concerned when they carry out financial transactions.
Examples include:
- local authorities issuing bonds;
- public institutions participating in markets;
- foundations holding financial instruments;
- associations carrying out certain investment transactions;
- public bodies participating in reportable transactions.
The determining factor is therefore not whether the entity is profit-making, but whether it participates in financial transactions requiring standardized identification.
When is a LEI mandatory?
A LEI generally becomes mandatory when an entity operates in a regulated financial context.
| Situation | LEI generally required? |
|---|---|
| Purchase or sale of shares by a company | Yes |
| Purchase or sale of bonds by a company | Yes |
| Bond issuance | Yes |
| Derivatives transaction | Yes |
| EMIR reporting | Yes |
| MiFID II / MiFIR reporting | Yes |
| SFTR reporting | Yes |
| Opening a securities account for a legal entity | Often yes |
| Relationship with a broker or custodian | Often yes |
| Ordinary commercial activity without regulated financial transactions | Generally no |
The LEI is particularly important in financial market reporting regimes. It allows the parties to a transaction to be identified without ambiguity and improves market transparency.
Do private companies need a LEI?
Yes. A private company may need a LEI.
It is a common misconception that the LEI only concerns listed companies. In reality, a private company may be concerned as soon as it carries out certain financial transactions.
A private company may in particular need a LEI to:
- issue bonds;
- obtain an ISIN code for financial securities;
- open a securities account;
- invest its cash in financial instruments;
- carry out transactions with a bank or broker;
- participate in a market transaction;
- be identified in regulatory reporting.
In France, a company wishing to structure an issue of securities must generally have a verifiable legal existence, in particular through its company registration. The LEI then supplements this identification within international financial systems.
Who generally does not need a LEI?
Certain persons or structures are generally not concerned.
A LEI is generally not required for:
- natural persons;
- sole traders who do not participate in financial markets;
- companies that do not carry out any regulated financial transactions;
- structures without separate legal personality, depending on the case;
- entities that have no relationship with a broker, custodian bank or market infrastructure.
However, an entity may choose to obtain a LEI voluntarily to facilitate future procedures.
Why obtain a LEI voluntarily?
Even when it is not immediately mandatory, a LEI can be useful.
It can help to:
- accelerate bank onboarding procedures;
- facilitate relationships with brokers and custodians;
- prepare a securities issuance;
- simplify certain international transactions;
- improve the quality of the entity’s identification data;
- anticipate future regulatory requirements.
For a growing company, holding company or investment vehicle, obtaining a LEI in advance can prevent operational blockages at the time of a transaction.
What are the risks of not having a LEI?
When a LEI is required, its absence can have very concrete consequences.
An entity without a LEI may face:
- refusal to execute an order;
- blockage when opening an account;
- rejection of a transaction;
- inability to complete a securities issuance;
- delays in a financing transaction;
- difficulties with regulatory reporting;
- non-compliance vis-à-vis a financial intermediary.
In certain cases, the rule is simple: if the entity is eligible for a LEI and regulatory reporting is triggered, the transaction cannot be processed without a valid LEI.
How to know if your entity needs a LEI
To determine whether your entity must obtain a LEI, ask the following questions:
- Is your entity a legal person?
- Does it carry out financial transactions?
- Does it issue or hold financial securities?
- Does it interact with a bank, broker or custodian?
- Is it subject to regulatory reporting?
- Is it planning a bond issuance, fundraising or market transaction?
- Has a financial intermediary requested a LEI?
If the answer is yes to any of these questions, it is likely that your entity needs to obtain a LEI.
How to obtain a LEI?
A LEI is obtained through an accredited LEI issuer or via a registration agent.
The process generally involves:
- entering the entity’s information;
- providing registration data;
- verifying the legal information;
- submitting the application to the competent organization;
- receiving the LEI code after validation.
The LEI must then be kept up to date. In practice, it must be renewed periodically so that the associated data remains valid and verified.
Obtain a LEI quickly
Get LEI assists companies, funds, holding companies and investment vehicles with obtaining their Legal Entity Identifier.
Our service simplifies the process, limits input errors and helps obtain an identifier that meets the requirements of financial intermediaries.
If your company needs to carry out a financial transaction, issue securities or open an account with an intermediary, it is preferable to obtain your LEI before launching the transaction.
You can submit your application directly via our dedicated page: LEI application:
To discover all our support services, you can also visit our services page: services
Conclusion
The LEI is essential for many entities involved in financial markets. It does not only concern banks or listed companies: a private company, fund, holding company or SPV may also need to obtain a LEI.
As soon as a legal entity carries out a regulated financial transaction, issues securities, deals with a broker or must be identified in reporting, the LEI becomes an operational prerequisite.
To avoid any blockage, it is recommended to check whether a LEI is needed before any significant financial transaction.