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Simple English definitions for legal terms
issuer
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A quick definition of issuer:
The term "issuer" refers to a person or entity that creates and sells securities, which are investments that people can buy. This includes things like stocks, bonds, and certificates of deposit. However, in some cases, the issuer may be a group of people or a legal entity, like a trust or committee. The issuer is responsible for following certain rules and regulations to ensure that the securities they sell are safe and fair for investors.
A more thorough explanation:
The term “issuer” refers to any person or entity that issues or plans to issue a security. This includes:
- Certificates of deposit, voting-trust certificates, or collateral-trust certificates
- Certificates of interest or shares in an unincorporated investment trust
- Fixed, restricted management, or unit type securities
- Equipment-trust certificates or similar securities
- Fractional undivided interests in oil, gas, or other mineral rights
For example, if a company wants to raise money by selling stocks or bonds, it is considered the issuer of those securities. Similarly, if an investment trust issues shares to the public, the person or persons who manage the trust are considered the issuer. In the case of equipment-trust certificates, the issuer is the person who will be using the equipment or property that the securities are based on.
The definition of issuer is important in securities law because it determines who is responsible for providing accurate and complete information to potential investors. The issuer is typically required to provide a prospectus or other disclosure document that outlines the risks and benefits of the investment.