Timesofummah.com – Issuer is a term that is most widely used in the world of investment and capital markets. This term refers to a private or state part that makes an effective effect on society aiming to raise additional capital or funds.
In general, the term is associated with companies in the stock market. This means that the company’s actions have been sold to the public.
This definition is not wrong, but also not quite right. Because the term is not only for companies, but individuals, joint efforts, associations and groups or organizations.
The offer given by the issuer is an offer to sell combined securities with the procedures regulated in the capital regulations and the applicable legislator.
Definition of Issuer
In the financial world, issuer itself means the party that makes a Public Offering, such as securities offering made by issuers to sell securities to the public based on procedures regulated by the applicable laws and regulations.
This can be interpreted as a company, both private and state-owned, which seeks capital from the stock exchange by issuing securities.
There are also securities offered by issuers, namely debt acknowledgments, shares, bonds, futures contracts for securities, proof of debt, commercial securities, units of participation in collective investment contracts, and any derivatives of securities.
Another type of securities is a sukuk, a sharia securities. Is a contract and the 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 an Effect?
When talking about Issuers, it is very 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. The company or institution that issues securities is called the issuer.
Difference between Issuer and Public Company
Due to the sale of Securities in the Capital Market, issuers are 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, an Issuer is a Party that conducts a Public Offering, which means that such party makes an offering of Securities to sell Securities to the public based on the procedures regulated in the prevailing 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 which is different from a public company, which means a company whose shares are owned by at least 300 shareholders and has a paid-up capital of at least Rp3 billion, or a number of shareholders and paid-in capital that has been stipulated by a Government Regulation.
Issuer’s Role in Capital Market
The role of an issuer in a capital market, among others:
- Expansion of a business, the capital that has been obtained from investors or shareholders will be used to expand the business field, market expansion or production capacity.
- Apart from that, it also improves the capital structure, balancing own capital with foreign capital.
- Conduct shareholder transfer. Transfer from old shareholders to new shareholders.
You can learn about the Prospects of Issuers with Assets Above 5 Trillion Coal Industry in early 2015 by Buddy Setianto
The Presence of Issuers Enliven the Stock Exchange
As we have discussed together above, issuers themselves can be in the form of private companies or state-owned enterprises, whether in a company that is open or closed.
However, the important thing that needs to be underlined is that not all companies have issuer status, because the status of issuer companies is only held for companies if they have traded their shares or bonds on the stock exchange floor.
Therefore, an issuer needs to conduct an IPO or what is called an Initial Public Offering before it can be called an issuer company. However, there are also some quite striking differences between public companies and issuers.
Reported from the official website of OJK or the Financial Services Authority, Public Companies are companies that have a Limited Liability Company basis, according to what is stated in Article 1 paragraph 1 concerning General Provisions of Law Number 40 of 2007 regarding Limited Liability Companies.
So, we can conclude that the most striking difference between issuer companies and public companies is that the issuer company is a company that has conducted an IPO and while for a public company it is a company with the status of a Limited Liability Company or PT that has conducted an IPO.
Company Goals to Become an Issuer
What are the reasons for a company to be listed in the capital market? Companies that decide to become issuers are not without reason. They want to get profit for the development and sustainability of the company.
Below are some of the benefits that you will get when you become an issuer, including:
1) The value of the company increases
By becoming an issuer and listed on the capital market, the value of a company will increase. This increase will also have a significant impact on public trust.
If the company has a value that continues to increase, the public will also trust and be interested in investing in a company. Which means that the more capital impetus to the company, the funds will be obtained from investors and then used to support the company’s strategic decisions, such as business expansion.
2) The image of the company increases
If a company has been listed in the capital market, it can be said that the company has been trusted and its image has been recognized by the public.
All information about a company can be easily accessed by the public as proof that the company can be trusted.
3) Business continuity is guaranteed
After becoming an issuer, the company will have the opportunity to get an injection of capital or funds from investors. These funds can be used as capital for the sustainability of their business in the future.
4) Get tax incentives
According to Government regulation no. 56 of 2015 states that a company in the form of a public company can get an income tax incentive of 5 percent lower than domestic corporate income tax.
Reasons for Companies to Issue Securities
In general, the reason for a company issuing securities is to obtain large and large additional capital. There are two ways companies obtain capital, namely:
1. Debt Financing
Debt financing itself has the meaning of debt financing. In which, issuers can get foreign capital by issuing securities which are also known as bonds, which means they borrow funds from the public.
2. Equity Financing
Equity financing has the meaning of 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 the debt.
Types of Securities Traded
There are many types of products offered, namely:
1. Shares (Right Issue, Warrant)
Shares are a sign of equity participation in the company. Simply put, shares are like evidence of ownership in a company or business entity.
So, when you own the shares, 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.
2. Corporate Bonds
These corporate bonds are issued by a national private company such as BUMN and also BUMD. Bonds are also often known as medium-long term debt securities whose ownership 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.
3. Mutual Funds
Mutual funds are one of the stock instruments of choice for investors, especially for investors who have little time and investors who do not have the expertise to calculate investment risk.
With this instrument, it is hoped that investors who have the will to contribute to the Indonesian capital market are expected.
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.
4. Exchange-Traded Funds (ETFs)
An Exchange Trade Fund or ETF is a financial bond that exists in the form of a collective investment contract, in which the investment units are traded on the stock exchange floor.
Although ETFs can be said to be almost the same as mutual funds, these products are also traded the same as other common stocks on the stock exchange.
Basically, the ETF itself is a combination of mutual funds in terms of management and all stock mechanisms in terms of buying and selling.
5. Derivatives (Stock Option Contracts, Futures Contracts)
Derivatives have the form of a contract or an agreement whose profit value is directly related to the performance of other assets or also known as underlying assets.
The securities of these derivatives are special derivative securities, whether they are investment or debt. The effect in question is a direct descendant of the main effect or subsequent derivatives.
Requirements to Become an Issuer
If you want to be on the floor on the stock exchange, there must be some requirements that need to be met. Among them:
- Prepare securities to be offered and traded to investors in the capital market.
- In a company that becomes an issuer, it is necessary to guarantee that the securities to be issued are in accordance with the law.
- Companies need to provide complete and accountable information.
In addition to the things above, there are several documents that must be prepared and submitted as conditions, including:
- The document contains other information as requested by the Financial Services Authority.
- Records of the company’s financial statements that have been audited by a public accountant.
- Curriculum vitae of the board of commissioners, directors or other equivalent positions.
- Opinions in terms of applicable law.
- Agreement with the Underwriter.
- Statement letter regarding the issuer’s commitment.
- Document requirements, as requirements for small-scale issuers and medium-scale issuers.
- Statement from the capital market supporting profession.
Issuer Registration and Information Disclosure
Issuers are required to include a registration statement in a public offering. On the other hand, public companies also need to be able to present a registration statement as a public company.
In relation to the registration statement, OJK will provide an effective statement to show proof of completeness, if all procedures and requirements have been fulfilled or a registration statement required in the laws and regulations that have been stipulated.
Issuer companies whose registration has become effective or public companies are required to be able to submit reports regularly, as well as announce them to the public.
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 condition occurs.
In accordance with the Republic of Indonesia Law no. 8 of 1995 concerning the capital market, a director, commissioner of a publicly listed company, and all parties who own issuers, a minimum of 5% of shares of publicly listed companies 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 .
Difference between Small and Medium Scale Issuers
Companies that have made 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-sized issuer? This definition has been written completely and clearly in the Financial Services Authority Regulation Number 53/PJOK.04/2017.
1. Small-scale company
The small-scale company in question is a company in the form of a legal entity established in Indonesia with asset ownership of not more than IDR 50 billion. Companies at this scale are also not controlled by public companies whose total assets are on a medium scale or more than Rp 250 billion.
2. Medium-scale 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 rupiah. Another characteristic is quite similar to that of a small scale, namely that it is not controlled directly or indirectly by a public company with assets of more than IDR 250 billion.
In general, the task of an issuer is to provide a public offering of securities, is responsible for managing public funds in good condition. The offered effects are as described above.
Apart from those mentioned above, there are several other types of securities that the Issuer will offer to the public. Which of course depends on the development of the capital market in Indonesia. To date, the government has also attempted to raise capital by issuing various innovative financial products.
How to Assess an Issuer’s Securities Offer
We can easily understand that it is not easy to be able to assess the effects that have been given by an issuer in an initial public offering. There are several things that need to be considered when buying a security offered by an issuer.
- Pay attention and also learn the fundamentals of the company related to how to view the prospectus in it. The prospectus usually contains financial statements, and in it there are also risks and opportunities for the company.
- Check whether other companies and sectors, related to the issuer. Also check the opportunities of the group, or what other related issuer sectors will look like in the future. We need to analyze macroeconomics in order to be able to read the prospects of the securities offered by the issuers.
- Pay attention to the securities that underwrite the company’s emissions. As a suggestion, choose a company that collaborates with underwriters who have experience and are well-known. The way to find out is to check the experience of the company’s underwriter.
Example of Issuer Company
Below are some examples from issuers that have been listed on the Indonesia Stock Exchange.
- ADHI (Adhi Karya (Persero) Tbk)
- AKRA (AKR Corporindo Tbk)
- ANTM (Aneka Tambang Tbk)
- ASII (Astra International Tbk)
- BBCA (Bank Central Asia Tbk)
- BBNI (Bank Negara Indonesia (Persero) Tbk)
- BBTN (Indonesian Savings Bank (Persero) Tbk)
You can learn about 597 Issuers listed on the Indonesia Stock Exchange September 2018 Edition Summary of Business Background and Management of Issuers by Buddy Setianto
After obtaining the complete explanation above, it can be concluded that an issuer company is a private company or BUMN that seeks capital assistance or an injection of funds on the stock exchange by issuing securities. The types of securities traded in it are quite varied, such as stocks, bonds, mutual funds, exchange traded funds, and derivatives.
If you are interested in helping or funding an issuer company, then there are several things that you must pay attention to, such as paying attention to the fundamentals of the issuer company, paying attention to the securities that have guaranteed the company’s emissions and others.