A Study Of Chinese Financing Institution On Securities Private Offering

Private offering of securities is a direct financing mode relevant to public offering of securities, which can satisfy various financing demands of issuers. It is a financing mode of enterprises which aims at specified objects, adopts specified modes, and subjects to the regulation of specified institutions.The dissertation is intended to conduct a systematic study of Chinese Financing Institution on securities private offering by employing the theories of Institutional Economics, Legal Science and Finance Securities. Its purpose is to address the institutional regulatory problems, such as the securities issued by private bodies, securities offering exemption, the conditions of private offering, the object&number of individuals, issuance mode, information disclosure, securities resale limitation by analysing the environment, institutional advantage, institutional framework,operational performance of the financing institution on securities private offering, and taking the equivalent of the U.S. A into account as well.The mode of private offering is the earliest one for incorporate securities financing. Private offering of securities is the general mode, whereas public offering of securities is the particular one which should be governed by particular regulations. A large quantity of regulations on securities financing by public offering should not be administered at the cost of suppressing securities financing by private offering.Meanwhile, the campaign of cracking down illegal fund-raising and unlawful securities activities should not be carried out instead of bringing securities financing by private offering into legal control. However, if the financing institution on securities private offering really comes into existence, the scope of securities is doomed to expand. Company securities financing, with the exclusion of bank loans shall fall within the regulationary scope of Securities Law.As the regulatory resources are limited,the exempted securities should be supervised by specific organs and the offering exemption with non-substantial quantity and private offering exemption should be put into effect .The main job of regulation under the exemption verification (registration)framework is to examine whether the qualifications of issuers are in conformity with the exemption requirements and to judge and evaluate the criteria for exemption. Issuers in compatibility with exemption requirements shall not be interfered, but those who are not in accordance with exemption requirements shall be subject to regulatory punishment. The action of the issuer is either legal or illegal and the illegal fund-raising as well as the unlawful securities activities will exist nowhere. The division of power over regulation shall be definite and the regulatory system shall be finally established.The coexistence of institution and environment constitutes a primary topic of institutional effectiveness. The Chinese financing institution on securities private offering coexists with its environment, that is, the scarcity of recources of securities financing by public offering, the insufficiency of supply of various financing demands, the insufficiency of regulatory institutions of illegal fund-raising and the lack of institutional supply of loans financing among the people. The financing institution on securities private offering possesses great advantages of saving transaction cost and time, and moderately controlling company structure. It is necessary for China to enhance the institution on securities private offering of listed companies and further reduce transaction cost.The Chinese institution on securities private offering has evolved over three phases. The institutional framework for securities financing by private offering has already been set up, but there is still much room for improvement. It can be enhanced on the basis of the better equivalent of the U.S.AThe establishment of security criteria for offering exemption is the backbone of the financing institution on securities private offering. To be specific, the following aspects should be clearly defined or modified or prescribed :the issuer, the qualification of the object and the number of individuals, the information disclosure requirement, the mode of private offering, securities resale restriction and reports for review ,etc.The verification of securities offering can be conducted in two fashions (one is approval, the other is on file),if the unlisted companies mean to finance by securities private offering or public offering. Public offering of the listed companies should be approved and private offering should be on file, however, the unlisted companies also should be on file.with regard to public offering.