Definition of "Issuer"

With the definition of "security" established, the next foundational concept is the issuer - the entity that creates and proposes to sell securities. Who qualifies as the issuer affects which registration method can be used.

General Definition

An issuer is any person who issues or proposes to issue any security.

This is straightforward for most situations: a corporation that sells its stock is the issuer of that stock.

Special Cases

The Uniform Securities Act (USA) addresses several situations where the "issuer" is not the obvious entity:

• Certificates of deposit, voting-trust certificates, collateral-trust certificates, and fixed/restricted/unit investment trusts without a board of directors: The "issuer" is the depositor or manager under the trust agreement (not the trust itself)
• Certificates of interest or participation in oil, gas, or mining titles or leases: There is no issuer

Exam Tip: Gotchas

Oil, gas, and mining interests have NO ISSUER under the USA. This means they cannot be registered by filing/notification under Section 302(a)(1), which requires an "issuer" meeting certain financial tests. These securities would need to use coordination or qualification instead.

Non-Issuer Transactions

A non-issuer transaction is one that is not directly or indirectly for the benefit of the issuer.

• A secondary market sale between two investors, where the issuer receives no proceeds, is a non-issuer transaction
• Non-issuer transactions may qualify for exemptions (for example, the isolated non-issuer transaction exemption under Section 402(b)(1))

The distinction matters because:

• Issuer transactions (initial offerings) require registration or an exemption
• Non-issuer transactions (secondary sales) may qualify for transaction exemptions that do not apply to issuer transactions
• All outstanding securities of the same class as a registered security are considered registered for non-issuer transactions while the registration is effective