On The Legal Supervision Of Crowdfunding In China

Apart from the traditional financial system, crowdfunding is a burgeoning Internet financing model, which features on a small scale, great attendants, and low threshold. As a complement to the formal investment industry, crowdfunding platform assist individuals or the start-ups in funding at a lower cost, which in turn facilitates their creativity. Besides, investors can participate in the innovative business and share the benefits through crowdfunding. Crowdfunding platform, nonetheless, is of risk. The opacity of financers, the inexperienced investor, and the high stakes of innovative business results in risks of crowdfunding and protection issues of investors. Furthermore, Equity-based crowdfunding involving some legal issues is more complicated. Specific legal supervisions have already emerged in the western countries. China, however, still lacks the legal orientation and supervision, which leads to crowdfunding wandering on the edge of the law and facing huge risks. This paper defines crowdfunding, and focuses on the hazards resulting from crowdfunding. Analyzing crowdfunding in American and Great Britain, this paper put forward with supervisory suggestions bringing about improvements in crowdfunding.The thesis is divided five parts as followed.Part One defines crowdfunding. crowdfunding refers to raising funds for an enterprise or a creative program by issuing stock equity or providing products or services in return. crowdfunding characterizes as openness, low thresholds, high efficiency, and low risks. Depending on different kinds of return of investment, crowdfunding is classified into Reward-based crowd-funding and Equity-based crowdfunding, which differ in operation pattern, investors’ rights, and the return cycle. Whereas Equity-based crowdfunding is a security, Reward-based crowd-funding is actually an exchange. Crowdfunding involves relationships arising from sales contract, commission contract, brokerage contract, limited partnership, nominal holding of shares, and share transfer, having a positive effect on capital market, culture industry, and technology industry and impacting the traditional financial industry. The public financing to raise legal and regulatory means from the perspective of regulatory measures, the state through legislative and judicial means of supervision and management of the public to raise crowdfuning; regulation aims to ensure efficiency and security.The second part of the need for the public to raise crowdfunding for the legal regulation are described. This section discusses the two major public necessity for crowdfunding, the first one is the risk of the herd for crowdfunding point of view, which is divided into a legal risk, indicating that it may violate the financing during the illegal fund-raising, illegal deposits from the public illegal public offering of securities, financial fraud and legal red line. Then it analyzes the risks inherent in the congregation to raise crowdfunding, the need for regulation of the draw. The second is the analysis of the legal norms to raise the crowdfunding of the defect, including a lack of legal status and lack of regulatory system for financing necessary to make crowdfunding under the regulation.The third part of the legal supervision of the United States, the United Kingdom crowdfunding during the summarized and learn from. US JOBS Act provides for the crowdfunding to raise new regulatory ideas, especially from the mandatory registration and disclosure of information investment ceiling set focus to investors, regulators and financing intermediary portal people simultaneously. Thus both soft and prudential regulatory system reduces the cost of financing for small businesses, and promote capital formation, but also for investors strong protection. Britain’s financial regulators around the regulatory objectives of consumer protection, financial behavior Authority to establish a platform for minimum prudential capital standards, customer funds protection rules, information disclosure system, information reporting system, the right to rescind the contract, platform collapse debt management arrangements and dispute settlement mechanisms seven basic regulatory rules, including the rules of information disclosure system is the core of all the chips supervision.The fourth part of the crowdfunding during the proposed legal and regulatory measures and suggestions. Crowdfunding during the first application of existing laws and regulations should be positive, while some of the relevant provisions be modified, and the development of specialized chips all regulatory, legal regulations and establish a unified and coordinated mechanism. And the principle of crowdfunding during regulation and prudential supervision should be combined with the principle of protection of investors; clear crowdfunding during the regulatory body should be classified supervision, Central Bank and SFC and CBRC and CIRC will be principles-based regulation and supervision combined with localized; proposed crowdfunding during the a variety of specific regulatory system market access system, QFII system, information disclosure system, limited partnership proposal paths; a clear legal responsibility to raise crowdfunding commitment to form a complete legal system from the civil, administrative, criminal.