Research On Equity Crowd-Funding Supervision Legal System

Since 2008, the international financial crisis stimulated the rise of crowd-funding, which is the typical representative of Internet financial and make an inevitable growth in recent years. Among four subcategories, equity crowd-funding can not only help economic recovery by financing small and medium enterprises(SMEs) which are a key engine of economic growth, but also can contribute to the establishment of a multi-level capital market. However, the high risks and legal problems involved in make it the focus of all countries. At present, nine platforms have become the members of Securities Association of China. Compared to the rapid development of the equity crowd-funding, equity crowd-funding supervision legal system of China needs perfecting.This paper is divided into four parts, the first part explains the definition of equity crowd-funding, and necessity of supervision. Firstly, compare the four patterns of crowd-funding in order to define the equity crowd-funding. Secondly, analysis the benefits and characteristics of equity crowd-funding, and indicate the important role in bridging the traditional financial and guiding private capital. Thirdly, conclude the necessity and urgency of supervision from the angle of potential systemic risks and investor protection concerns. The second part evaluates legal risks and supervision status quo of China’s equity crowd-funding. Firstly, introduce equity crowd-funding operating mechanism, which is the basis of further analysis. Secondly, point out risks of equity crowd-funding under the existing legal framework in China, such as: nominal holding of shares, illegal fund-raising, issue shares and corporate bonds without authorization and fraud. Thirdly, review dynamic and status quo of regulation, and consider the healthy development of equity crowd-funding need to improve the supervision. The third part investigates the world’s crowd-funding supervision legal system. Focus on the comparison of investors appropriateness, platforms regulation, qualification of issuers and investor protection mechanism, which aims at providing reference and inspiration for the China’s regulation of equity crowd-funding as well as Securities Law. The fourth part proposes specific recommendations on perfecting equity crowd-funding supervision legal system of China. Consider innovative ideas, and try to balance the two objectives----promoting SME financing and protecting investors. Motivate the amendment of Securities Law so as to get rid of legitimacy dilemma of equity crowd-funding. Consummate protection of investors by setting investment ceiling, confirming lead investor’s responsibility as well as platforms’ qualifications, conduct, obligations and responsibilities. According to the features of Internet financing, propose differentiated disclosure requirements and establish a unified industry standard of Internet inquiry, in order to contain the risks of equity crowd-funding at the source.