Stock investing is now quite popular. Even for now it can be said that stocks are the most favorite stock investments for various circles, ranging from gen Z, millennials to the elderly are still many who are interested in stock investment.
Well, in the world of stock investing itself there are many popular terms that must be known and understood by those who will invest in stocks. Of the many popular terms that exist, which must be known by investors and traders are issuers.
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| Issuer: Understanding, Function and Terms of becoming an Issuer Company |
If you are a beginner investor or are learning stock investing must be looking around, which issuers have good potential to invest.
So, what is an issuer?
Understanding Issuers
Issuers are a very common term in the world of investment and capital markets. This designation refers to a party (both private and government) that offers securities generally to the public in order to obtain additional capital or funds.
Issuers may offer Securities in the form of debt recognition letters, commercial securities, stocks, bonds, debt proof marks, collective investment contract Participation Units, futures contracts on Securities, and any derivatives of securities.
The effects that are often traded by the issuer company are:
- Stock
- Corporate bonds
- Fund
- Exchange traded fund
- Derivative stocks
The parties referred to by issuers are individuals, companies, associations, joint ventures, and organized groups.
Issuers are obliged to submit a Registration Statement to conduct a Public Offering and Public Companies are obliged to submit a Registration Statement as a Public Company. Above
The Registration Statement, the Financial Services Authority (formerly Bapepam-LK) provides an effective statement that shows the completeness or fulfillment of all procedures and requirements for the Registration Statement required in applicable laws and regulations.
Such effective representation is not a permission to conduct a Public Offering nor does it mean that the Financial Services Authority declares the information disclosed by the Issuer or the Public Company to be true or sufficient.
Functions of the Issuer
Basically, the issuer company is the lifeblood of all stock exchange activity. Without stock issuers, investors and other supporting institutions will not be able to meet their interests. If it is likened to a market, the issuer company is the trader.
Well, here are the main functions of issuers in the capital market:
1. Become the Focus of Stock Exchange Activity
The issuer is the provider of instruments traded in the stock exchange. Therefore, all the focus of exchange activity depends on how much the issuer does the stock listing there. The number of stock issuers can be one sign of the high passion for investment in a country.
2. Providing Stock Lot Options for The Community
The next function of the issuer is to provide a lot of shares for investors to buy. With the availability of stock lots at various prices, people can adjust the investment budget to their respective financial budgets.
3. Utilizing the Services of Underwriters and Other Capital Market Participants
In addition to investors and issuers, the capital market has a variety of other market participants who help smooth stock trading. With the issuer, these market participants have a source of income as a livelihood.
4. Improving Investor Welfare
The last function of the issuer company is to improve the welfare of investors. Every year, the issuer will disburse the distribution of profits to shareholders in the form of dividends. The percentage of profits can help investors improve their well-being.
Along with the main function, the issuer also has a goal whose benefits can not only be felt by the provision of shares (issuer companies) but also investors. These goals are:
- Improving business capital structure
- Expanding your business
- Protecting the Company from the Risk of Bankruptcy
- Transferring ShareHolding
Requirements for Companies That Want to Become Issuers
Not all companies can be stock issuers. There are certain provisions that must be met by the company before it can sell shares on the exchange. Based on idx regulations, some of the requirements to become an issuer are as follows:
- Legal entity in the form of Limited Liability Company (PT), not CV or other form of business entity
- Have an independent commissioner at least 30% of the board of commissioners
- Have an independent director of at least 1 person from the board of directors
- Have an audit committee (internal and external) as well as an internal secretary of the company
- Meanwhile, in terms of institutions, the requirements to become an issuer company are:
- Operate on the same core business for at least 36 months (3 years)
- Have evidence of a certain business profit in the last 1 year (the bigger the better)
- Posted audited financial statements over the past 3 years, with an opinion of "Reasonable Without Exception"
- Have tangible assets above Rp100 billion
- Number of shareholders at least 1000 people
If one of the requirements cannot be met then the company is still said not to be worthy to be an issuer on the exchange floor.
Get to Know The Issuer Well before Buying Shares
One successful way to succeed in stock investing is to get to know the existing issuers well. Try to find clearly related info from the issuer company that you are looking for, for example, the company is engaged in what economic sector, potentially, is trending or much in demand.
By getting to know the company well, you not only have a greater opportunity to achieve stock investment profits, but also reduce the risk of loss.
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