Issuer definition
/What is an Issuer?
An issuer is an entity that offers debt securities or equity securities for sale to investors. An issuer sells securities in order to obtain funding for its operations or acquisitions. An issuer does not have to be a for-profit corporation; governments commonly issue debt securities, too.
Many issuers fall under the reporting requirements of the Securities and Exchange Commission (SEC). Some issuers avoid these burdensome requirements by using a variety of exemptions allowed by the SEC. These exemptions are designed for smaller issuances to discerning investors with a high net worth.
Example of an Issuer
As an example of an issuer, Molehill Corporation sells 100,000 shares of its common stock to the investment community, with the intent of using the proceeds to acquire new digging equipment. This means that Molehill is an issuer, and is required to make regular informational filings with the Securities and Exchange Commission that reveal its financial situation.
Issuers vs. Investors
An issuer and an investor are key participants in financial markets, but they play opposite roles. Here are the main differences between them:
Roles. An issuer creates and sells financial instruments like stocks, bonds, or other securities to raise capital, while an investor buys these securities with the expectation of earning a return, such as dividends, interest, or capital appreciation.
Purpose. An issuer seeks to raise funds for business expansion, debt repayment, infrastructure projects, or other financial needs, while an investor aims to grow wealth, generate income, or diversify their portfolio by purchasing securities issued by issuers.
Risk exposure. An issuer carries the risk of meeting financial obligations, such as paying interest on bonds or delivering returns to shareholders, while the investor assumes the risk of market fluctuations, potential losses, or default by the issuer.