Research On The Legal Regulation Of Equity Crowdfunding

Along with the deep integration of the Internet and finance, equity crowdfunding slips into the spotlight as the third wave of the Internet Finance. Equity crowdfunding is not only conductive to solve the financing problem of the micro, small and medium enterprises and startups, but also greatly enrich the investment channels of general investors. However, while equity crowdfunding becoming the new pet of both investor and financing side, the conflict between equity crowdfunding and current legal system is urgently to await solution. Also the potential fraud risks become visible. In order to empower equity crowdfunding with legal status and accelerate the capital formation of micro, small and medium enterprises and startups, also prevent fraud risks and protect the interests of investors, it’s necessary for our country to explore the path to apply legal regulation to equity crowdfunding. This thesis can be divided into five chapters except the introduction.The overview of equity crowdfunding. As a new financing model, equity crowdfunding has different characteristics from the traditional financing model such as technology dependence, the investment subject and level of risk. The legal attribute of equity crowdfunding defines the way to find the relevant legal regulation path for our country. Taking reference of the definition methodology from US securities law and the judicial practice, we can identify the equity crowdfunding as “security” by the definition of the securities law theory.The background and current situation of Chinese equity crowdfunding development. Although equity crowdfunding derived from America, it has been developed rapidly since the introduction of China. The reason behind is that the traditional financing lane for micro, small and medium enterprises and startups is being blocked. Neither the conventional capital market, bank credits nor traditional equity investment can solve this financing problem. Meanwhile, the fact that traditional investment channels for ordinary investors in China is also blocked, high threshold and low returns make many investors frustrated about investment. In order to draw a whole picture of domestic equity crowdfunding to readers, this thesis chooses Angel Crunch and Dajiatou as two examples to analyze the business models and system designs in depth.The legal problems and risks of equity crowdfunding in China. As a kind of innovative financial products, equity crowdfunding is incompatible with current law regulation in many ways; most of them are the issuance of securities without approval or illegal operation of securities business. This maladjustment is a great hinderance to the healthy growth of equity crowdfunding, and the equity crowdfunding business is walking on the ice. Meanwhile, though it’s good news for micro, small and medium enterprises and startups, the fraud risk behind equity crowdfunding can’t be ignored, primarily like issuing fraud security by raiser, project fraud and lead investor fraud.The overseas legal regulation and inspiration. Considering that Italy is the first European country dedicated to equity crowdfunding legislation and the enormous impact of JOBS Act, this thesis chooses Italy and America to introduce the experience of overseas legal regulation of equity crowdfunding, analyzes and summarizes beneficial content for our reference.The suggestions of legal regulation of equity crowdfunding in China. On the basis of deep analysis of legal problems and risks of equity crowdfunding,combining with the experience of overseas legal regulation, this thesis comes up with the following suggestions to domestic equity crowdfunding accordingly: remove legal system obstacles by expanding the definition scope of securities; weakening the restrictions on the forms of enterprise organization; establishing the exemption system of fractional security issuance and relaxing the restrictions on the number of investors. We should establish supporting system for equity crowdfunding in areas such as information disclosure, financing upper limit, platform registering and filing, platform obligations and investor eligibility system. The autonomic function of industry association is also an important role in this play. The author believes, through the above regulation methodologies, equity crowdfunding is fully capable of promoting capital raising of micro, small and medium enterprises and startups while keeping away from fraud risks and protecting the interest of the investors, and eventually realizing the continuous and healthy development of itself.