The Difference Between an IPO and an Issuer: Key Market Terms Every Company Should Understand

What Is an IPO?
An Initial Public Offering (IPO) is the process through which a company offers and sells its shares to the public for the first time through the Indonesia Stock Exchange (IDX). Through an IPO, a company transitions from being privately held to becoming a public company whose shares can be freely traded.

Common objectives of an IPO include:

• Raising new capital for business expansion
• Enhancing corporate credibility and brand reputation
• Improving capital structure
• Providing liquidity for existing shareholders

• Corporate restructuring
• Legal Due Diligence by legal counsel
• Preparation of the prospectus
• Filing the registration statement with the Financial Services Authority (OJK)
• Public offering to investors
• Listing shares on the IDX

This entire process is closely supervised by OJK and IDX to ensure transparency, governance, and investor protection principles are met.

What Is an Issuer?
Under Indonesian Capital Market Law, an issuer is any party that conducts a public offering of securities, whether in the form of shares, bonds, or other financial instruments. In other words, issuer reflects the legal status of an entity because it has conducted a public offeringnot simply because it is listed on the stock exchange.

Key characteristics of an issuer include:

• Conducting a public offering of securities
• Being subject to disclosure obligations
• Required to submit periodic and incident reports to OJK
• Must comply with corporate governance standards
• Becoming an issuer places the company under increased regulatory oversight and obligates the company to meet ongoing compliance requirements.

Key Differences Between an IPO and an Issuer
Although related, IPO and issuer are fundamentally different concepts.

Process vs. Status
- An IPO is the process of conducting a companys first public offering.

- An issuer is the status a company acquires once it has conducted a public offering.

Duration
- An IPO occurs once, during the initial offering.

- Issuer is a continuous legal status that remains for as long as the company is a public company.

Legal Obligations
- A company undergoing an IPO focuses on documentation, due diligence, and regulatory approvals.

- An issuer must comply with ongoing reporting, transparency, and corporate governance obligations.

Cause and Effect
- A company that conducts an IPO becomes an issuer once the offering becomes effective.

- However, not all issuers came from IPOs; a company issuing bonds, for example, may also be considered an issuer.

Why Understanding the Difference Matters
For companies considering capital raising through the public market, knowing the distinction helps in preparing:

• A sound corporate structure
• Proper legal and tax compliance
• Internal readiness for public-company governance
• Long-term planning for life as a listed company
• Each stage also carries different legal risks. Failure to meet disclosure or compliance obligations can lead to administrative sanctions and serious reputational consequences.

The Role of Legal Counsel in IPOs and Ongoing Issuer Compliance
A law firm plays a crucial role in:

• Preparing and reviewing legal documents
• Conducting Legal Due Diligence
• Identifying legal risks and preparing mitigation strategies
• Guiding the company through interactions with OJK and IDX
• Ensuring ongoing compliance after the company becomes an issuer
• Legal support is often a decisive factor in ensuring that both the IPO process and post-listing compliance run smoothly.

Conclusion
IPO and issuer are closely related but represent different aspects of a companys journey into the capital market. An IPO is the initial public offering process, while an issuer is the legal status of a company that has conducted a public offering. Understanding both concepts is essential for companies aiming to enter the public market with strong governance and long-term sustainability.

If your company is considering an IPO or requires legal assistance for other corporate actions in the capital market, professional legal advisory can help ensure a smooth process and long-term compliance.