Research On The Suitability Rules For Investors Concerning Equity-Based Crowdfunding

Universally applicable suitability rules are not yet established in China now.Suitability rules were firstly adopted for the GEM board.There are similar contents in the regulatory rules of equity-based crowdfunding,but the wording"investor suitability" is not definitely used.As a new mode of Internet financing,equity-based crowdfunding has its special features compared with the main board,the GEM board and the futures market.Suitability rules,information disclosure and responsibility tracing are main approaches to protect investors.Most of the researches relating to equity-based crowdfunding focus on its legitimacy,supervisory system and information disclosure etc.but there are limited researches on investor suitability in the sector of equity-based crowdfunding.An outstanding feature of equity-based crowdfunding lies in its financing process,i.e.the crowdfunding platform uses a format investment agreement and the corresponding payment services to promote the deal between the investor and the financing party.The suitability rules originated from the USA and they were initially taken as an obligation of a securities broker during its promotion of investment products to an investor but gradually extended to cover the sales of other financial products.The suitability rules are created on the basis of good faith.The crowdfunding platform has certain trust relations with the investor,so does the lead investor with the co-investor.A platform is imposed with the obligation to "know about the displayed financing project and the conditions of investors registered on the platform".Moreover,such obligation should continue from the beginning of a project until withdrawal of investor.In order to establish the suitability rules for investors of equity-based crowdfunding with reference to European and American legislative experience,it is necessary to:clarify the rationality of suitability rules for equity-based crowdfunding,i.e.to clarify the scope of application of suitability rules;adopt reasonable investor classification standards and allow investor to convert the type;clarify the scope of subject for suitability and the system of obligations;preferentially establish the lead investor's suitability obligation rules;improve judicial,regulatory and self-disciplinary policies.