Legal Entity Identifier Now Mandatory For Certain Listed Instruments

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May 11, 2023

Legal Entity Identifier Now Mandatory For Certain Listed Instruments

The Securities and Exchange Board of India has, by way of a Circular dated May 3, 2023^[1] introduced with immediate effect the requirement to obtain a Legal Entity Identifier for issuers who have issued or propose to issue listed (a) non-convertible securities; (b) securitized debt instruments; or (c) security receipts.

Background

A Legal Entity Identifier (‘LEI’) is a 20-character unique global identifier code which identifies every legal entity that is a party to a financial transaction in any jurisdiction. At present, the Reserve Bank of India (‘RBI’) requires all non-individual borrowers to obtain a LEI code in a phased manner^[2].

Reporting Requirements under SEBI Circular

In view of the above, the Securities and Exchange Board of India (‘SEBI’) now requires issuers having listed (a) non-convertible securities; (b) securitized debt instruments; or (c) security receipts (collectively, ‘Instruments’) outstanding or who propose to issue listed Instruments to report or obtain and report the LEI code. The reporting requirements are summarized below:

Applicability	Timeline	To be Reported To
Issuers having outstanding listed Instruments as on August 31, 2023	Report or obtain and report LEI code on or before September 1, 2023	For non-convertible securities (‘NCS’) – Centralised database of corporate bonds
		For securitized debt instruments and security receipts – Depositories
Issuers proposing to issue and list Instruments on or after September 1, 2023	Report the LEI code at the time of allotment of the International Securities Identification Numbering system (‘ISIN’)	For NCS – Centralised database of corporate bonds
		For securitized debt instruments and security receipts – Depositories

Obtaining the LEI Code

Entities can obtain the LEI code from (a) any local operating units accredited by the Global Legal Entity Identifier Foundation; or (b) Legal Entity Identifier India Ltd., a subsidiary of the Clearing Corporation of India Limited, if obtained in India.

Role of Depositories

Depositories have been tasked with (a) mapping the LEI code to existing ISINs by September 30, 2023, in case the LEI code has already been obtained pursuant to the instructions of the RBI; and (b) for future issuances, mapping the LEI code provided by the issuers with the ISIN at the time of activation of the ISIN.

Way Forward

SEBI has now joined the global movement for improving transparency and efficiency in financial transactions. Issuers which have any of the Instruments listed will have to now comply with an additional requirement and in a timebound manner as set out in the Circular. It remains to be seen if SEBI will issue a different set of directions for issuers who have listed municipal debt or who propose to list municipal debt, as the extant regulatory framework does not deal with this.

[1] https://www.sebi.gov.in/legal/circulars/may-2023/introduction-of-legal-entity-identifier-lei-for-issuers-who-have-listed-and-or-propose-to-list-non-convertible-securities-securitised-debt-instruments-and-security-receipts_70875.html

[2] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12301&Mode=0

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