LEI codes for foundations, housing co-operatives, owners' associations and clubs

LEI codes are most often associated with limited companies, but the requirement applies to every legal entity that trades securities. That means foundations, housing co-operatives, owners' associations and clubs may also need an LEI code. Often the board only finds out when the bank blocks an investment. Here is what applies.

Why does the bank require an LEI code?

Under MiFID II and the MiFIR regulation, banks and investment firms must report their clients' transactions to the authorities. When the client is a legal entity, it is identified by an LEI code (Legal Entity Identifier), an international 20-character code.

Without a valid LEI code, the bank cannot execute the trade. This applies whether the client is a listed company or a small sports club.

Foundations (stiftelser)

Many foundations manage capital and use the returns for their purpose, such as scholarships, research or culture. If the foundation invests in listed shares, bonds, ETFs or other exchange-traded securities, it needs an LEI code.

As long as the foundation only invests in ordinary funds or keeps its money in the bank, it usually needs no LEI code. But many foundations have an asset manager who spreads the capital across several asset classes, so it is wise to get the code in advance so that investments are not blocked.

Housing co-operatives and owners' associations

Most housing co-operatives (borettslag) and owners' associations (eierseksjonssameier) keep their funds in bank accounts, and in that case no LEI code is needed. But some with larger surpluses or maintenance funds choose to invest part of it in fixed-income or other securities.

If the co-operative or owners' association buys bonds, certificates or other exchange-traded securities, it needs an LEI code. If it only invests in ordinary fixed-income funds, it usually doesn't.

Associations and sports clubs

An association (forening) or sports club (idrettslag) with its own organisation number is a legal entity. Associations that keep a buffer invested in shares or bonds therefore need an LEI code, just like a limited company.

If the association only keeps money in a bank account or ordinary funds, it doesn't need one.

The rule of thumb

The same simple rule applies to all types of organisation:

• Listed shares, bonds, certificates, ETFs and derivatives: an LEI code is required.
• Ordinary funds, bank deposits and high-interest accounts: an LEI code is usually not required.

If the bank asks for an LEI code for a particular investment, it is because it needs the code for its reporting. Ask your bank if you are unsure.

What do you need to apply?

When applying for an LEI code, you will need:

• the organisation's organisation number;
• its name and address as registered;
• details of the applicant and how that person is authorised to represent the organisation, for example as chair of the board or with signing authority;
• if needed, documents confirming the organisation, such as a certificate of registration from the Register of Business Enterprises, an extract from the Register of Foundations, or the statutes and a board resolution for an association.

For organisations registered in the Central Coordinating Register for Legal Entities (Enhetsregisteret), most of the details can be retrieved automatically from the Brønnøysund Register Centre.

Remember renewal when the board changes

An LEI code must be renewed every year. In foundations, housing co-operatives and associations, the board and treasurer often change, which makes it easy to forget the renewal. If the code lapses, the bank may block investments.

One way to avoid this is to choose a longer validity period or automatic renewal, so the code stays valid even when responsibility changes hands.

Get an LEI code for your organisation

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. Order your LEI code here or contact us if you have questions about your organisation.

In short

• Every legal entity that trades exchange-traded securities needs an LEI code, including foundations, housing co-operatives, owners' associations and clubs.
• Ordinary funds and bank deposits usually require no LEI code.
• Most housing co-operatives and owners' associations need no LEI code, as long as they don't buy securities.
• The code must be renewed every year, so make sure someone on the board is responsible.