The Legal Protection Of Investors On Equity Crowdfunding Investment

Protecting investors' rights is an never-ending theme because it concerns not only the real interests of individual investors,but also normal functioning of financial regulation and sound development of the financial market.In China,equity-based crowdfunding,as a brandnew model of internet finance,has innate shortcomings as the relevant Chinese laws and regulations are are not well-developed and supportive implementation measures are yet to be formulated.This legal inadequacy may constitute legal risks to investors in equity-based crowdfunding.First of all,the investors in equity-based crowdfunding mostly comprise of the ordinary public.These people usually lack sufficient financial knowledge,risk identification and bearing capabilities,which in turn is likely to lead to irrational investment.Second,the models of crowdfunding are still in the ungoing process of development and evolution(for example,the practice of equity-based crowdfunding through public placement is currently just in pilot stage),far from been full-fledged.Since the investors are unfamiliar with and inexperienced in this area,their interests may be easily harmed.Third,generally speaking,micro,small and medium-sized enterprises represent the entities in need of funds when it comes to equity-based crowdfunding,and most of these businesses are startup ones which would end up in operation failure too often.A lack of regulation rules have added to fraud and systemic risks in respect of financing.Fraud in investment contracts arising from insufficient regulations could expose the investors to a very risky situation.Therefore,it is imperative that equity-based crowdfunding should be included in China's regulations in this field.while protecting the the interests of investors,effective regulation can also play a critical role in facilitating fundraising.If equity-based crowdfunding weren't be regulated properly,uniform operation rules relating to equity-based crowdfunding would not be established naturally over time,which would in turn create a disorder to the models of equity-based crowdfunding and lead to insufficient information disclosure and financing fraud.Furthermore,the disorderly market would make investors less secure and confident;and thus these investors would move towards other less risky fields.Since apt regulation of equity-based crowdfunding is in conducive to both investor protection and capital formation,the key issue is to strike a balance between the investors' protection on the one end and facilitation of fundraising on the other.In the context of China,equity-based crowdfunding is in a dilemma of legitimacy.This dissertation focuses on the protection of investors in equity-based crowdfunding.It delves into the related legal issues the investors face by examining the different interests of various stakeholders and then proposes suggestions.Finally,the author proposes to provide a comprehensive relief of investors' rights in euqity-based crowdfunding.The dissertation includes seven chapters,with their main contents summarized as follows:Chapter one makes an account of the background,significance and status quo of the research on equity-based crowdfunding and elaborates on the sequences of thought and aspects of innovation and those that could be improved in future in this dissertation.Chapter two studies the origin,development history,concepts,and models of equity-based crowdfunding,analyses the civil legal relationships between the stakeholders of equity-based crowdfunding,and then deals with legal risks the investors may face in equity-based crowdfunding and particularities of their rights,provoding a basic theoretical foundation for further study of the investors' rights in equity-based crowdfunding.Chapter three expounds on the requirements for investors to access to equity-based crowdfunding and suggests appropriate access requirements for the sake of Chinese investors in this field.And the author argues that fit and proper management should be be applied to existing investors that have already been engaged in equity-based crowdfunding,and proposes that the principle of "caveat emptor" should be applied to by them while analyzing some exceptional circumstances.Chapter four makes an analysis of the fundraiser of equity-based crowdfunding.In order to secure the lawful rights of investors and further development of the industry,laws and regulations need to be put in place to govern the conduct of the fundraiser,for example,setting industrial access rules,improving the unreasonable existing provisions,and defining rights,obligations and liabilities of the fundraiser.In particular,the obligation of information disclosure on the part of the fundraiser can bring about information assymetry between the investors and the fundraiser,overcome financing fraud and generate rational investment.Chapter five provides the requirements for the platform of equity-based crowdfunding.To protect the investors of equity-based crowdfunding,the platform should be properly governed by laws and regulations.For instance,setting market access standards,defining the nature,functions,rights,obligations and liabilities of the qualified platforms,and putting in place appropriate regulating measures.Then the authors makes coresponding rational suggestions to address the critical issues regarding the regulation of Chinese platforms after drawing upon and assimilating the foreign regulation experience and integrating it into Chinese landscape.Chapter six offers relief to the investors in equity-based crowdfunding.When the interests of these investors are prejudiced,they can obtain relief can by way of either litigation or non-litigation.Aside from the two types of reliefs,the related systems should be formulated to minimize the likelihood of damage of interests of investors of equity-based crowdfunding.With big data technology,a information sharing sytem,a credibility system ought to be set up.Additionally,insurance mechanisms will enable the investors of equity-based crowdfunding to shift their risks.Chapter seven concludes with the development outlook of equity-based crowdfunding building on the aforesaid analysis and arguments.In summary,the dissertation centers upon the protection of investors of equity-based crowdfunding.It examines,in great detail,legal risks that the investors may encounter and put forward corresponding suggestions,with the hopes of facilitating sound development of the industry in China.