The Construction Of The System Of Private Placement In China

China's securities market started late. In the 80's of 20th century, the shortage of funds has become a major barrier restricting the development of SMEs because of the lack of Capital Market and the narrow of the financingchannels. The standard of Public Offering is too high and the amount of the bank loans is so small which can not solve the big problem. Some companies run a risk to borrow money from the workers and the villagers around, but they were suspected of illegal fund-raising and violating the law. Such as Dawu Farming Group of Xushui County ,Hebei Province.Nearly three decades later, with the development of economic globalization and liberalization, providing a healthy legal environment and economic environment is an important factor to determine whether a country's economy can develop healthy and rapidly. Private placement plays an important role in capital market due to high efficiency, low cost, light information disclosure and other advantages. However, the legal system of China's private placement is still in the absence . Avoiding the recurrence of a similar case of Sun Dawu and providing a legal basis for the corporate finance, this paper proposes some recommendations for the construction of the system of private placement based on the analysis of the China's current situation, the system of private placement in USA and Taiwan. The paper includes the introduction, the body consisted of three chapters and the conclusion.In the introduction the writer firstly reviewed Sun Dawu case, the development of Dawu Farming Group, the financial bottlenecks, the methods to solve the shortage of funds and the breach of the law. Then the writer analyzes the case, the current environment of corporate finance and legal environment. There are personal reasons but the most important reason is social cause about Sun Dawu case.Chapter One: The definition of private placement and its significance. In this chapter ,firstly the writer analyzes the definition of private placement, non-public offering, public offering, illegal fund-raising and private lending so as to lay the theoretical foundation for further study in the next chapter. Secondly, the writer analyzes the significance of private placement from the four aspects. Private placement is an effective means for corporate financing.Chapter Two: The development of the system of the domestic and international private placement. In this chapter firstly the writer introduces the system of private placement of U.S in chronological order, mainly the content and spirit of 1933《Securities Act》4(2),rule 146, regulation D, rules144 and rule 144A . Secondly the writer introduces the system of private placement of Taiwan look forward to helping the construction of the system of private placement of Mainland China. Finally the writer reviews and analyzes the development and the present situation of the private placement of Mainland China. The writer reviews a number of similar private placement behavior such as employees of the company shares, employee shares, bank subordinated debt, etc,trying to find laws deficiency of private placement.Chapter Three: Suggestions to construct the system of private placement in China. The writer puts forward some feasible suggestions to build the system of private placement from five aspects which are the definition of private placement, the issuer's criteria, private object criteria, private disclosure system and resale restrictions.In the conclusion the writer hopes the system of private placement will provide a legal basis for the corporate finance so as to promote the development of our economy better and faster with the construction of private legal system and constant improvement.