On Legal Supervision And Management On Internet Crowdfunding In China

A new mode of financing named Internet Crowdfunding has came into being with the rapid development of Internet Finance, that is, entrepreneurs seek for finance support and help from strangers through Internet platform. The significance of Internet Crowdfunding is that many strangers get together because they are all keen on a project or an idea, and they manage to make the project realizable with the financial support. An internet crowdfunding could be launched and invested by everyone who has great idea or creative ability, which is its most attractive characteristics.Ever since 2011, Internet Crowdfunding came to China from the distant Europe and America and developed rapidly. In less than Four years, nearly one hundred of Internet Crowdfunding platforms were established. In the single year of 2014, Internet Crowdfunding platforms in China have raised a capital amount to 600 million RMB. Internet Crowdfunding has three basic types, namely, Fundraising type, Returning type, Equity type. Investors can get profits from different types of internet crowdfunding, which satisfy themselves materially and spiritually, establish benignant financing channels and utilize idle funds effectively. At the same time, promoters can finish their creative projects or expand business with the money they raised from crowdfunding. In terms of social responsibility, internet crowdfunding relieves much employment pressure, turns more surplus labour into productivity and inspires more people to create.In our country, The Internet Crowdfunding is still in its infancy, as a public financing way, there is few domestic law and regulation for Internet Crowdfunding. Giving the serious lacking of legal regulation, this kind of platform is very easy to be used as a springboard for frauds or illegal fund- raisers without a clear legal supervision system. For the ordinary investors, they have no professional identify ability about investment risk. Their understanding of the project is all come from the Internet Crowdfunding platform. If the project sponsor has ran out the raised money and failed to pay for return, within the prescribed period of time, the investors have to bear all the losses on his own, for there is no refund compensation system. Under the current state of the protection of intellectual property rights, for the project sponsor, if they show too much detail of their ideas or products, it will easily be plagiarized. But if the description is too simple, it will be not enough to attract more investors and money to realize the projects.To protect subjects of internet crowdfunding, especial profit of the most vulnerable investors,domestic Internet Crowdfunding has declared clearly on his website that "project sponsors are forbidden to get equity, dividends, interest, bonds in return through the Crowdfunding platform" to give investors in return in accordance. It’s not possible to formalize this industry only on constraint of internet. There is still much risks for investors.We should thus draw lessons from other countries about their legal regulatory rules and regulations to build our own Internet legal regulatory rules and regulations systems. First of all, there must be strict rules of market access mechanism, namely the establishment of the auditing mechanism of the Internet Crowdfunding platform. It should be set from the aspects of information technology and risk control capacity. The Internet Crowdfunding platform without regulatory approval should be abolished. We should establish a unified information database and entrust the fund to the third-party financial institutions in order to ensure the secure the investors’ money. Second, we should strengthen the protection of the rights and the interests of the investors. The money flows and later-on supervision and the operation process of the Internet Crowdfunding platform should be fully transparent, so as to give more information to the investors and help them avoid fraud. Finally, we should perfect the information disclosure system. The project sponsor should disclose the actual situation of the project and the enterprise so as to prevent capital loss due of hidden information. Funding ceilings should be set in order to prevent malicious financing behavior and threaten to the investors’ money.