Dipak Rao & Gunjan Gupta


30/03/2020

 

The Reserve Bank of India (RBI) vide its notifications dated November 29, 2018 and April 26, 2019 provided that an entity having net worth up to INR 2000 million, undertaking a single transaction or multiple transactions on the same date, in non-derivative forex markets, involving an amount equivalent to or exceeding USD one million, after March 31, 2020 could do so, only if the said entity has Legal Entity Identifier (LEI) code. LEI is a unique 20 character alpha-numeric global identifier of legal entities participating in financial transactions.

 

For obtaining the LEI code, the applicant entity, inter-alia, needs to submit the details (including the LEI) of its parent and/or ultimate parent company. Herein, the term ‘parent’ refers to the lowest level entity which consolidates the financials of the applicant entity and the term ‘ultimate parent’ refers to the highest level entity which consolidates the financials of the applicant entity. There could be a possibility that parent and ultimate parent can be same entity, if financials are consolidated by only one entity. Thus, the shareholding structure is not a criteria for determining the parent and/or ultimate parent for LEI registration purposes. The applicant entity can also search the LEI of its parent and/or ultimate parent on the web portal of Legal Entity Identifier India Limited (https://www.ccilindia-lei.co.in/USR_LEGAL_DOC_DOWNLOAD_ANONYMOUS.aspx) by clicking on the ‘Search’ option.

 

In wake of coronavirus (COVID-19) outbreak, the RBI vide its notification dated March 27, 2020 has extended the deadline for obtaining the LEI code from March 31, 2020 to September 30, 2020. Pursuant to the said extension, the entities are permitted to undertake single transaction or multiple transaction on the same date, involving an amount equivalent to or exceeding USD one million, without obtaining LEI code up to extended due date (i.e. September 30, 2020). Further, the entity which do not foresee a single transaction or multiple transactions on the same date, after the aforesaid extended due date, involving  an amount equivalent to or exceeding USD one million, need not mandatorily obtain the LEI code and may apply for the same on voluntary basis.