Renewing Your LEI Code – When and Why is it Necessary?
An LEI code (Legal Entity Identifier) uniquely identifies legally registered entities in international financial transactions. However, an LEI code does not remain valid indefinitely—businesses must renew it annually to ensure accuracy and reliability. Below, we provide an overview of why LEI renewal matters, how often to renew it, and how it impacts business operations.
Why is LEI Code Renewal Important?
Renewing your LEI code is essential to ensure that the information associated with the code – such as the company name, address, and ownership structure – is accurate and up-to-date. Regulatory bodies and financial markets rely on reliable information to identify all parties involved in transactions, making it crucial for LEI data to be correct at all times.
If an LEI code is not renewed, it becomes “lapsed,” which can lead to several issues:
- Loss of Access to Financial Transactions: As a result, many financial institutions and platforms do not accept companies with lapsed LEI codes, since these codes no longer meet the required standards.
- Regulatory Violations and Penalties: Furthermore, in some jurisdictions, using a lapsed LEI code may result in non-compliance with regulatory requirements, which, in turn, can lead to fines or other sanctions.
- Decreased Credibility: Additionally, a lapsed LEI code can harm a company’s credibility in international markets, as it may suggest a lack of attention to compliance and transparency.
How Often Should You Renew an LEI Code?
An LEI code is valid for one year from the date of issuance. It must be renewed every 12 months to remain active. Renewal involves reviewing and verifying company information and updating it as needed. LEI System OÜ (hereafter LEI System), an official registration agent, offers renewal services and sends timely reminders to ensure that companies do not risk losing their active LEI code status.
The Global Legal Entity Identifier Foundation (GLEIF) has regularly commented on the importance of timely renewal of Legal Entity Identifiers (LEIs). Renewal means that the reference data, i.e. the publicly available information on legal entities identifiable with an LEI, is re-validated annually by the managing LEI issuer against a third party source. For more information click here.
How LEI Renewal Impacts Business Operations
Keeping your LEI code active is crucial to ensuring smooth international financial operations. By renewing your LEI code, your business ensures that:
- Transactions Run Smoothly: An active LEI code allows your company to participate in international financial transactions and meet compliance requirements, which is especially important in banking and trading.
- Maintain Credibility and Transparency: Renewing your LEI code shows that your company follows regulatory requirements and values transparency, building trust among partners and investors.
- Meet Regulatory Compliance: Updating your LEI code ensures that your business complies with local and international regulations, which reduces the risk of fines and sanctions.
The LEI Code Renewal Process with LEI System
Renewing your LEI code is easy when you use a trusted service provider, such as LEI System, an official registration agent. Here’s how the LEI renewal process works with LEI System:
- We Remind You: LEI System sends you a reminder before your renewal date, so you don’t have to keep track of it yourself.
- Update Your Information: Make sure all your company information is accurate and up-to-date. If necessary, you can update any information before submitting your renewal.
- Submit Your Renewal Application: Complete the simple renewal form on our website and pay the renewal fee.
- LEI System Verifies and Submits Data: LEI System verifies your submitted information and forwards it to GLEIF (Global Legal Entity Identifier Foundation), which extends the validity of your LEI code for the next year.
Conclusion
Consistently renewing your LEI code is a crucial step toward ensuring both compliance and credibility for your business in international markets. Furthermore, a renewed LEI code confirms that your company meets regulatory standards, thus enabling smooth access to financial transactions and strengthening trust with partners. As an official registration agent, LEI System makes the LEI renewal process straightforward and efficient. Click here to keep your LEI code up-to-date!
