Study On Legal Supervision Of Equity-based Crowd-funding In China

Equity-based crowd-funding,an “exotic concept” originated from western developed countries,is flourishing after being introduced into China.Based on the internet,this kind of crowd-funding owns features like “the public”,“small amount” and “open” which are obviously different from those of traditional financing models.By combining broad pioneering enterprises and public investors,this new type financing model invigorates private capitals,broadens financing channels for enterprises,deepens the development of financial reform,and enriches the multi-level system of China's capital market.After The 18 th National Congress of the Communist Party of China,financial regulatory transformation became the routine work of the government.The Congress required the government to properly deal with a relation with markets,and change functions to drive the regulatory transformation.After Li Keqiang,Premier of the State Council,proposed the concept of “mass entrepreneurship and innovation”,a new era of overall startup and innovation started in China,which may bring unprecedented opportunities and challenges to Equity-based crowd-funding.Equity-based crowd-funding involves the contents which are conflicting between China's traditional securities laws and corporation laws.Therefore,to protect legal interests of investors and maintain a steady and orderly monetary market,we should regard the legal supervision and management of equity-based crowd-funding the matter of prime importance in the supervision and management of this field.The author thinks that equity-based crowd-funding is mainly related to three legal issues: First,the legalization of the financing model of equity-based crowd-funding is a problem to be solved.In the process of equity-based crowd-funding,it is easy to meet problems about the public issue of security like “issue securities to more than 200 people” and “issue securities to unspecified persons”.In accordance with Clause 10 of the Securities Act,the public issue of securities must be examined and approved by China Securities Regulatory Commission or other departments authorized by the State of Council.Therefore,we should legalize equity-based crowd-funding in legal form,providing a supervision and management environment which conforms to its characteristics and is in favor of improving financing efficiency of newly-established firms.Second,platforms of equity-based crowd-funding require more comprehensive and stricter supervision and management.These platforms are used for financing parties and investors to exchange information.Whether there are unlawful acts like cheat or malicious collusion,or other ethical risk behaviors are directly related to the rights and interests of investors.Therefore,the Securities Association of China and regulators should launch more normative operation rules for these platforms to ensure their standard operation and healthy development.Third,all kinds of equity-based crowdfunding behaviors should be strictly defined and financing behaviors with different volumes supervised and managed by different methods.China should differentiate types of equity-based crowd-funding by factors like way of financing and upper limit of financed amount of a single project,and adopts corresponding supervision and management systems to different types.With the research object of the legal supervision and management of equity-based crowd-funding,this paper firstly gives an overall introduction to equity-based crowd-funding combining with origin of crowd-funding and its current situations,secondly analyzes the Administrative Measures for Private Equity Crowd-funding(for Trial Implementation)(Draft for Comment),the measures with highest research value in current China,by referring to foreign experience on equity-based crowd-funding and the experience of America in legal supervision and management,and finally gives advices on legal supervision and management.This paper is divided into introduction,main body,and conclusions.The main body contains four chapters.Chapter I introduces the development history of crowd-funding from the angle of history,shows the significance to apply equity-based crowd-funding in current financing field,gives an outline of the concept of equity-based crowd-funding,and elaborates the necessity of legal supervision and management.Being divided into two parts,Chapter II gives a rounded analysis to China's current situation of supervision and management on equity-based crowd-funding.From the development status of equity-based crowd-funding in China,it firstly clarifies the faced legal risks and supervision and management difficulties.Secondly,with the research object of Administrative Measures for Private Equity Crowd-funding(for Trial Implementation)(Draft for Comment),it classifies and summarizes contents of this Administrative Measures,analyzes the present three main problems therein,and explains the current situation of legislation on the legal supervision and management of equity-based crowd-funding.Chapter III introduces current situation of development,supervision and management of equity-based crowd-funding in foreign countries,and,with the research focus on JOBS case in America,expounds regulatory policies and systems on equity-based crowd-funding adopted by American supervision authorities.According to contents of above three chapters,Chapter IV gives suggestions on the perfection of the legal supervision and management after a rounded analysis.The suggestions are divided into two parts.The first part shows the way to perfect supervision and management from the general situation,and the second part proposes corresponding suggestions on supervision and management of three objects of equity-based crowd-funding from specific perspectives.Finally,the conclusions sums up the contents of the main body,emphasizes the necessity of legal supervision and management on equity-based crowd-funding again,and comes up with significant conclusions about how to solve the supervision and management problems.