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definition_of_issuer, Study notes of Business Economics

Universitas Dian Nuswantoro (UDN)Business Economics

The definition, purpose, types, conditions, and duties of issuers in the world of investment and capital markets. It also discusses the differences between issuers and public companies, the role of issuers in the capital market, and the requirements to become an issuer. The document also briefly explains corporate bonds, mutual funds, exchange-traded funds, and derivatives. useful for students studying finance, economics, or business management.

Typology: Study notes

2021/2022

Available from 02/16/2023

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Definition of Issuer: Purpose, Types, Conditions, and Duties

Issuer is a term that is most widely used in the world of investment and capital markets. This

term refers to the private or state part that makes an effective effect on society aimed at

increasing capital or additional funds.

In general, the term is associated with companies in the stock market. That is, the actions of

such companies have been sold to the public.

This understanding is not wrong, but it is also not quite right. Because this term is not only

for companies, but individuals, joint efforts, associations and groups or organizations.

The offer given by the issuer is a combined securities sale offer with procedures stipulated in

the applicable capital and legislator rules.

Definition of Issuer

In the financial world, the issuer itself has the meaning of a party who conducts a Public

Offering, such as an offering of securities made by an issuer to sell Securities to the public

based on procedures that have been regulated by applicable laws and regulations.

This can be interpreted as a company both private and state-owned that seeks capital from

the stock exchange by issuing securities.

There are also securities offered by the issuer, namely debt recognition letters, stocks, bonds,

futures contracts on securities, proof of debt, commercial securities, units of participation in

collective investment contracts, and any derivatives of securities.

Another type of effect is sukuk, a sharia effect. It is an agreement and method of issuance

that is in accordance with sharia principles in the capital market. In general, companies in this

category offer securities through the capital market for stocks, bonds, and sukuk.

What Is Effect?

When it comes to issuers, it is closely related to securities. Securities in English are called

"securities" or securities, which means securities that have value and can be traded. Securities

can be categorized as debt and equity like bonds and stocks. A company or an institution that

issues securities is called a publisher.

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Definition of Issuer: Purpose, Types, Conditions, and Duties Issuer is a term that is most widely used in the world of investment and capital markets. This term refers to the private or state part that makes an effective effect on society aimed at increasing capital or additional funds. In general, the term is associated with companies in the stock market. That is, the actions of such companies have been sold to the public. This understanding is not wrong, but it is also not quite right. Because this term is not only for companies, but individuals, joint efforts, associations and groups or organizations. The offer given by the issuer is a combined securities sale offer with procedures stipulated in the applicable capital and legislator rules. Definition of Issuer In the financial world, the issuer itself has the meaning of a party who conducts a Public Offering, such as an offering of securities made by an issuer to sell Securities to the public based on procedures that have been regulated by applicable laws and regulations. This can be interpreted as a company both private and state-owned that seeks capital from the stock exchange by issuing securities. There are also securities offered by the issuer, namely debt recognition letters, stocks, bonds, futures contracts on securities, proof of debt, commercial securities, units of participation in collective investment contracts, and any derivatives of securities. Another type of effect is sukuk, a sharia effect. It is an agreement and method of issuance that is in accordance with sharia principles in the capital market. In general, companies in this category offer securities through the capital market for stocks, bonds, and sukuk. What Is Effect? When it comes to issuers, it is closely related to securities. Securities in English are called "securities" or securities, which means securities that have value and can be traded. Securities can be categorized as debt and equity like bonds and stocks. A company or an institution that issues securities is called a publisher.

Differences between Issuers and Public Companies Because a sale of Securities in the Capital Market makes issuers often equated with public companies. However, the Issuer itself is not the same as a Public Company. Based on the written Law of the Republic of Indonesia No. 8 of 1995 concerning the Capital Market, the Issuer is a Party to a Public Offering, which means that the party offers Securities to sell Securities to the public based on the procedures regulated in the applicable laws and regulations. The issuer itself is in the form of an individual, company, joint venture, association, or also in the form of an organized group that is different from a public company, which means a company whose shares have been owned by at least 300 shareholders and have a paid-up capital of at least IDR 3 billion, or a number of shareholders and paid-up capital that has been determined by a Government Regulation. The Role of Issuers in the Capital Market The role of an issuer in a capital market includes:

Expansion of a business, the capital that has been obtained from investors or stock growers will be used to expand the business field, market expansion or production capacity.
In addition, it also improves the capital structure, balancing own capital with foreign capital.
Holding a transfer of shareholders. Transfer from old shareholders to new shareholders. The Presence of Issuers Enlivening the Stock Exchange As we discussed together above, the issuer itself can be in the form of a private company or a state-owned enterprise, be it in an open or closed company. However, the important thing that needs to be underlined is that not all companies have issuer status, because the status of an issuer company that is only held for companies is if they have traded their shares or bonds on the stock exchange floor.

Business continuity becomes more guaranteed After becoming an issuer, the company will have the opportunity to get capital injections or funds from investors. These funds can be used as capital for the sustainability of their business in the future.
Get tax incentives In accordance with Government Regulation No. 56 of 2015, it is stated that companies in the form of Public Companies can get Income Tax incentives as much as 5 percent lower than domestic corporate Income Tax. Why Companies Issue Securities In general, the reason a company issues securities is in order to get a lot of additional and large capital. There are two ways a company acquires capital, namely:

Debt Financing Debt financing itself has the meaning of debt funding. Which, issuers can get foreign capital by issuing securities also known as bonds, which means they borrow funds from the public.
Equity Financing Equity financing means funding by offering half of the company's ownership rights to those who want to provide capital. From this funding, a company will benefit greatly. In addition to obtaining funds, the company also does not need to return the funds and also does not need to pay interest on debts. Types of Securities Traded There are many types of products offered, namely:
Shares (Right Issue, Warrant) Shares are a sign of capital participation in the company. Simply put, shares are like evidence of ownership in a company or business entity.

So, when you own the shares, then you can already be said to be the owner of the company. Therefore, shares are often referred to as securities, because they can be used as proof of legal ownership of the company.

Corporate Bonds This corporate bond is issued by a national private company such as BUMN and also BUMD. Bonds are also often known as medium-long-term bonds whose holdings can be transferred. The content of this letter is an agreement from the company that will issue bonds to pay profits in the form of interest also within a certain period of time and will pay off the principal debt at a previously determined time.
Mutual funds Mutual funds themselves are one of the choices of stock instruments for investors, especially for investors who have little time and investors who do not have the expertise to calculate investment risk. With this one instrument, it is expected that investors who have the willingness to contribute to the Indonesian capital market. Generally, mutual funds can also be interpreted as a forum used to collect funds from investors so that they can then be invested in a securities portfolio by the relevant investment manager.
Exchange-Traded Funds (ETFs) An Exchange Trade Fund or ETF is a financial bond that is present in the form of a collective investment contract, which in which the participation unit is traded on the floor of the stock exchange. Although ETFs can be said to be almost the same as mutual funds, this product is also traded just like other common stocks on the exchange floor. Basically, ETFs themselves are a combination of mutual funds in terms of management and the entire stock mechanism in terms of buying and selling.
Derivatives (Stock Option Contracts, Futures Contracts)

Agreement with the Underwriter.
Statement letter about the commitment of the issuer.
Document requirements, as a requirement for small-scale issuers and medium-sized issuers.
Statement from the capital market supporting profession.
Issuer Registration and Information Disclosure For issuers, they are required to include a registration statement in a public offering. On the other hand, public companies also need to be able to present registration statements as public companies. Regarding the registration statement, the OJK will provide an effective statement to show proof of completeness, if all procedures and requirements or a registration statement are met that are required in the established laws and regulations. Issuer companies whose registration has become effective or public companies must be able to submit their reports regularly, as well as announce them to the wider community. In addition, for a report, it is also necessary to be able to announce to the public about material events that affect the price of securities no later than the second working day after the existence of these conditions. In accordance with The Law of the Republic of Indonesia No. 8 of 1995 concerning the capital market, a director, commissioner of a public issuer company, and all parties who own an issuer, at least 5% of the shares of a public company issuer also need to report ownership, as well as any changes to the company's share ownership at least 10 days after the change of ownership. Differences between Small and Medium Scale Issuers Companies that have conducted this public offering are divided into two, namely small-scale and medium-scale issuers. What is a small-scale company and what is a medium-scale issuer? This understanding has been written completely and clearly in the Financial Services Authority Regulation Number 53 / PJOK.04 / 2017.

Small-scale enterprises

The small-scale company in question is a company in the form of a legal entity established in Indonesia with an asset ownership of no more than IDR 50 billion. Companies on this scale are also not controlled by public companies whose total assets are on a medium scale or more than RP 250 billion.

Medium-sized enterprises This medium-scale issuer is a company that has a legal entity built in Indonesia, but has assets equivalent to or more than IDR 50 billion to IDR 250 billion. Another characteristic is quite the same as the small scale, which is that it is not controlled directly or indirectly by a public company that has assets of more than RP 250 billion. Duties of the Issuer In general, the task of an issuer is to publicly offer securities, responsible for managing public funds in good condition. The effects are offered as outlined above. In addition to those mentioned above, there are still several other types of securities that the Issuer will offer to the public. Of course, this depends on the development of the capital market in Indonesia. Until now, the government has also tried to raise capital by issuing various financial products innovatively. How to Assess Issuer Securities Offering We can easily understand that it is not easy to be able to assess the securities that have been given by an issuer in an initial public offering. There are several things to pay attention to when buying a securities offered by an issuer. Pay attention and also learn the fundamentals of the company related to how to see the prospectus in it. In the prospectus, there are usually financial statements, and in it there are also risks of opportunities as well as opportunities for the company. Check whether the company and other sectors, are related to the issuer. Also check the opportunities of the group, or other related issuer sectors in the future. We need to analyze the macroeconomics in order to read the prospects of the securities offered by the issuers. Pay attention to the securities that guarantee the company's emissions. As a suggestion, to choose a company that cooperates with the services of underwriters who have experience