What Is an Issuer?
An issuer is a legal entity that develops, registers and sells securities to finance its operations. Issuers may be corporations, investment trusts, or domestic or foreign governments. Issuers are legally responsible for the obligations of the issue and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions.
Understanding Issuers
Issuers most frequently make available the following types of securities: common and preferred stocks, bonds, notes, debentures, bills and derivatives. Other issuers aggregate funds from a pool of investors to issue mutual fund shares or exchange traded funds (ETFs).
To illustrate the role of an issuer, imagine ABC Corporation sells common shares to the general public on the market to generate capital to finance its business operations. This means ABC Corporation is an issuer and is therefore required to file with regulators, such as the Securities and Exchange Commission (SEC), disclosing relevant financial information about the company. ABC must also meet any legal obligations or regulations in the jurisdiction where it issued the security. Writers of options are occasionally referred to as issuers of options because they also sell securities on a market.
A non-issuer transaction is one that is not directly or indirectly executed for the benefit of the issuer. Non-issuer transactions refer to any disposition of a security that does not confer a benefit to the issuer (company).
Key Takeaways
- An issuer is a legal entity that develops, registers and sells securities to finance its operations.
- Issuers may be corporations, investment trusts, or domestic or foreign governments.
- Issuers make available securities such as equity shares, bonds, and warrants.