Research On The Legal Regulation Of He-hui

As a kind of traditional folk finance in China, He-hui plays an important role in economic construction. However, with the expansion of the scale of He-hui, the phenomenon of its bankruptcy has occurred frequently in real life, which makes it be regarded as an illegal financial activity because of the lack of legal regulation. Under the background of financial innovation, the folk finance will be gradually recognized by law and the legal basis of He-hui should be reviewed again. Most importantly, effective prevention and control system should be built in order to avoid the risk of He-hui’s operation. This paper tries to analyze the reason why He-hui should be recognized legal in China and explore the necessity of its regulation. The ultimate goal of this paper is to ensure He-hui’s healthy development in our country by building a legal relationship system for it, at the same time with forming a set of risk prevention and control system.The first part of this paper mainly introduces the basic theory of He-hui, including its connotation, classification and mode of operation, under the basis of which, we should discuss whether He-hui should have legal status and the necessity of the legal regulation of it.The second part of this paper explores the legal basis of He-hui in our country from practice and theory angle respectively. Nowadays under the background of financial innovation, He-hui is expected to make up for the deficiency of the formal finance with its flexible financing form. As a kind of folk custom, He-hui is different from illegal financial activities. On the premise of admitting its contract attribute, He-hui should get respect and recognition of our country’s law.The third part of this paper analyzes the cause of the risk of He-hui’s operation thoroughly, combining with the phenomenon of He-hui’s bankruptcy somewhere in China. Besides, this paper explores the necessity of the legal regulation of He-hui with the theory of financial risk control in order to prevent the risk of He-hui’s abnormal operation.The fourth part of this paper puts forward some specific suggestions for the legal regulation of He-hui in Chinese mainland. Drawing Chinese Taiwan’s Relatively mature legislative experience, this paper focuses on the establishment of specific law of He-hui including its establishment, change, termination and the parties’ rights and obligations, as well as supporting the construction of risk prevention and control system.