Communal Associations Require a LEI

Although the negotiations between communal associations and the German Financial Supervisory Authority (BaFin) have resulted in an EMIR exemption of such associations and their legally dependent municipal enterprises, they require a Legal Entity Identifier (LEI) if they want to make any OTC transactions..

For their financial reporting, banks always need the LEI of all contracting parties involved in OTC deals. Thus, also communal associations will have to obtain a LEI if they are engaging in OTC transactions.

It is less clear whether or not public sector institutions and special-purpose associations will be exempt from the EMIR requirement or not.There is the general presumption that such institutions do not meet the criteria of a company as defined by EMIR. But if they also engage in other activities, then the focus of such activities matters.

If the financial statements show that income from economic activities exceeds the income generated with activities that can clearly be associated with acts of public authority, an EMIR requirement applies. Income that cannot clearly be associated with either type of activity is not considered.

Municipally owned private-law enterprises can be classified as companies as defined by EMIR. Consequently, the EMIR requirement applies to them.

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