Legal entity
The registered company that owns a transaction, and its place in the group reporting hierarchy.
01 Why it matters
What depends on getting this right
Consolidation, intercompany elimination, tax and every group-level figure depend on it. It is also the entity most often assumed to be simple and most often restated after a reorganisation.
02 Where it lives
Every system holds a different version
None of these is wrong. Each was built for a purpose and records the part of the entity that purpose needed, which is exactly why resolution is required rather than optional.
| System | What it holds of this entity |
|---|---|
| ERP | company code, which scopes almost every transaction |
| EPM / consolidation | the reporting hierarchy, eliminations and translation |
| Treasury and banking | accounts, facilities and covenants per borrowing entity |
| Statutory and secretarial | registration, ownership and directorships |
03 Match keys
What actually matches, and what only looks like it does
| Key | How well it works |
|---|---|
| Registration number and jurisdiction | The only genuinely reliable key. |
| Company code | Reliable inside one ERP, meaningless across two. |
| LEI | Where it exists, resolves financial counterparties cleanly. |
| Ownership percentage and effective date | Not a key, but required to interpret any hierarchy correctly. |
04 Survivorship
When two records disagree, which value wins
Survivorship is a business decision, not a technical default. These rules should be agreed with the people who own the data and then applied consistently, because changing them later restates history.
Registry data is authoritative for legal attributes
Name, jurisdiction and status come from the register, not from the ledger.
Hierarchy is effective-dated, never overwritten
A reorganisation creates a new version; overwriting destroys comparability.
Ownership percentages drive consolidation method
Full, proportional or equity treatment follows from the percentage and must travel with it.
05 The cost of not doing it
What stays broken while it is unresolved
Period comparisons that are pure structure
A restated hierarchy makes a variance appear where nothing changed in the business.
Intercompany that will not eliminate
Counterparty entity recorded inconsistently leaves a residual nobody can explain.
Covenant tested at the wrong level
The borrowing group inside the structure can breach while the consolidated ratio looks comfortable.
Tax and transfer pricing exposure
Transactions attributed to the wrong entity are a compliance problem, not a reporting one.
06 Metrics that divide by it
The numbers this entity carries
07 Questions
Frequently asked
Why keep effective-dated hierarchies?
Because every historical comparison needs the structure as it was, and every restatement needs the structure as it is. Holding only current state makes one of those two impossible.
Is legal entity the same as business unit?
No, and conflating them is a common source of unreconcilable reporting. Management structure crosses legal entities freely; statutory reporting cannot.
See the duplicates in your own data
We will resolve one entity on your systems, live, and show what the duplicates are costing.