Research On Legal Regulations Of Equity-based Crowdfunding

The Government Work Report of 2015 put forward the policy which called Popular Entrepreneurship and Innovation in order to encourage people to start their own businesses and to make innovations. However, if you have no hand you can’t make a fist. In the same way, starting or running businesses needs capital. Start-ups and micro, small and medium enterprises as an important part of our socialist market economy, which have rich innovation ability in the national economy. But their development has stunted by the Sme Financing Difficulties. Fortunately, a new internet financial model: Equity-based Crowdfunding was born, which connects two sides, namely, start-ups and micro, small and medium enterprises and investors. Equity-based Crowdfunding has provided the two parties with a financing platform so that it can realize the capital and reasonable efficient allocation of resources.The 13 th Five-Year Plan for Economic and Social Development of the People’s Republic of China has required to improve the financial market system and build a multi-level capital market. In the age of Big Data, the combination of “Internet +” and Inclusive Finance has created a good opportunity for Internet Finance. Equity-based Crowdfunding is the new one of the creations in the multi-level capital market, and it can settle the Sme Financing Difficulties. However, a lot of problems such as the immaturity of the market system, the weak specialized knowledge and risk awareness of investors, the bugs of the legal system, which has troubled the development of Equity-based Crowdfunding.In this paper, I research on protection of the rights and interests of investors during the whole procedure of Equity-based Crowdfunding and analyze three parts which include the market admittance and exit mechanism and the problems in operation. In view of the risk and protection of investors in the crowdfunding, I have figured out one solution to it, which is named Process Regulation. On the premise of this research and analysis, I try to conceive a legal regulating system and its matching mechanism for investor protection so that they can make Equity-based Crowdfunding fit the Chinese market and achieve multi-win effects. The paper Consists of the following four parts.The first part is introduction. It introduces the research background, theoretical significance, actuality value, literature review and this paper’s innovation and research thought.The second part is the overview of Equity-based Crowdfunding. At the beganning, this part tells what is Equity-based Crowdfunding and its legal regulatory conditions in the domestic and overseas. And then, it discusses the types in practice and the nature of Equity-based Crowdfunding in law. At last, it tells the theoretical foundation of the protection of the rights and interests of investors.The third part is Process Regulation, the emphasis. This part discusses the market admittance and exit mechanism and the problems in operation and points the risks in the procedure of Equity-based Crowdfunding. Therefore, it gives the solutions to the problems and manage these risks.The fourth part is the System Building Conception. Based on the above three parts, this part will design one system to execute legal supervision and one matching mechanism to protect the rights and interests of investors.