Securities and Exchange Board of India (SEBI) vide notification no. SEBI/HO/DDHS/DDHS_Div1/P/CIR/2023/64 dated 03rd May, 2023, in exercise of powers conferred under Section 11(1) of theSecurities and Exchange Board of India Act, 1992 read with Regulation 55 (1) of the SEBI(Issue and Listing of Non-Convertible Securities) Regulations, 2021, Regulation 29 of the SEBI (Issue and Listing of Municipal Debt Securities), Regulations, 2015 and Regulations48 of the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, to protect the interests ofinvestors in securities and to promote the development of, and to regulate thesecurities market, has issued a circular on "Introduction of Legal Entity Identifier (LEI) for issuers who have listed and/ orpropose to list non-convertible securities, securitised debt instruments and security receipts".
SEBI has introduced 'Legal Entity Identifier' (LEI) system for issuers who have listed or proposed to list non-convertible securities (NCS), securitised debt instruments and security receipts.
The Circular was issued to
- Issuers who have listed and/ or propose to list non-convertible securities, securitised debt instruments, security receipts and municipal debt securities; and
- Registered Depositories
Applicability
This circular shall come into force with immediate effect i.e. 03.05.2023.
What is Legal Entity Identifier (LEI) in India?
LEI is a unique global identifier for legal entities participating in financial transactions which is designed to create a global reference data system that uniquely identifies every legal entity, in any jurisdiction, that is party to a financial transaction.
It is a unique 20-character code to identify legally distinct entities that engage in financial transactions. Presently, RBI directions, inter alia, mandate non-individual borrowers having aggregate exposure of above Rs 25 crore, to obtain LEI code.
In a notification dated November 29 2018, the RBI mandated the use of LEIs by all participants, other than individuals, who wish to transact in markets regulated by the RBI. LEI use by large corporate borrowers is also mandated by the Reserve Bank of India, as per the RBI Notification dated November 2, 2017.
Key Highlights of the Circular
1. SEBI has decided the followings:
- Issuers having outstanding listed non-convertible securities as onAugust 31, 2023, shall report/ obtain and report the LEI code in the Centralized Database of corporate bonds, on or before September 1, 2023.
- Issuers having outstanding listed securitized debt instruments and security receipts as on August 31, 2023, shall report/ obtain and report the LEI code to the Depository(ies), on or before September 1, 2023.
- issuers proposing to issue and list non-convertible securities, on or after September 01, 2023, shall report their LEI code in the Centralized Database of corporate bonds at the time of allotment of the ISIN.
- Similarly, issuers proposing to issue and list securitised debt instruments and security receipts, on or after September 01, 2023, shall report their LEI code to the Depositories at the time of allotment of the ISIN.
- The requirement of LEI for issuers proposing to list/ having outstanding municipal debt securities shall be specified later
2. Entities can obtain the LEI code from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF).
3. The LEI code may be obtained from Legal Entity Identifier India Ltd (LEIIL), a subsidiary of the ClearingCorporation of India Limited (CCIL).
4. The Depositories shall do the followings:
- map the LEI code to existing ISINs by September 30, 2023; and
- for future issuances, map the LEI code provided by the issuers with the ISIN at the time of activation of the ISIN.
SEBI has issued this circular introducing the LEI system, which comes into force immediately However, the requirement of LEI for issuers proposing to list or having outstanding municipal debt securities will be specified later by SEBI.
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