Many Norwegian business owners hold their shares through a holding company (holdingselskap). One key reason is the exemption method (fritaksmetoden): dividends and gains on shares received by a limited company (AS) are largely tax-exempt, so the money can be reinvested without first being taken out privately. But when the holding company is about to buy its first shares, a question comes up: does the company need an LEI code? Here are the rules.
An LEI code (Legal Entity Identifier) is an international 20-character code that identifies a legal entity on the financial markets. It follows the global ISO 17442 standard, and every LEI code is published in an open, free database maintained by GLEIF (the Global Legal Entity Identifier Foundation).
Since MiFID II and the MiFIR regulation came into force, investment firms have had to report their clients' trades to the authorities. When the client is a legal entity, the LEI code is used in the reports. This is the "no LEI, no trade" principle: without a valid LEI code, the bank or online broker cannot execute the company's trades.
The requirement applies when the company trades financial instruments admitted to trading on a trading venue. The holding company therefore needs an LEI code to trade, for example:
The size of the company and the amount invested make no difference. The requirement applies to a small holding company with one owner just as much as to a large group.
As a rule, the company does not need an LEI code for:
This is confirmed by, among others, Nordnet, which states that the LEI requirement does not apply to fund trading or unlisted shares. A holding company that only saves in ordinary funds can therefore do without an LEI code. But as soon as it buys a single listed share or ETF, it needs one.
A share savings account (aksjesparekonto, ASK) can only be opened by individual taxpayers, not by limited companies. If you invest privately through your own ASK, you need no LEI code, because private individuals are identified differently in the banks' reports. The LEI requirement only applies when the company owns the investment.
The same goes for a sole proprietorship (enkeltpersonforetak, ENK): it is not a separate legal entity, so it usually needs no LEI code.
If you have a holding company and one or more operating companies, each company that trades securities needs its own LEI code. An LEI code cannot be shared between companies.
When you apply for an LEI code, you also state the company's ownership structure: the direct and ultimate parent company, if they consolidate the company's accounts. This information is public and shows who owns whom.
Once you have your LEI code, give it to your bank or online broker. With some brokers, such as Nordnet, the LEI code is linked to the account automatically using the company's organisation number once the code has been registered with GLEIF. It can take a little while before the code is active on the account. Contact your bank if you are unsure how it works there.
An LEI code must be renewed every year. At renewal, the company's details are checked and updated. If the code is not renewed, it gets the status "lapsed", and the bank may block the company's trades, often just when you want to make one.
You can avoid keeping track of renewals by choosing a longer validity period or automatic renewal.
At Global FinReg, you can order an LEI code with a validity period of 1, 3 or 5 years, from NOK 664 per year excluding VAT with 5-year validity. We retrieve the company's details directly from the Brønnøysund Register Centre, so the application only takes a few minutes.
Order your LEI code here or contact us if you have any questions.
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