Study On Legal Problems Of Chinese Equity Crowdfunding

A country cannot develop its society and economy healthily without the support from small and medium-sized enterprises and startups.However,the traditional financing market in China is very unfriendly to these small and medium-sized financiers due to historical reasons,which makes them have been beset with high access thresholds and financing costs for a long time.But with the rise of the Internet,a new financing form has emerged,that is equity crowdfunding.By virtue of its unique advantages,equity crowdfunding has tackled financing difficulties for small and medium-sized enterprises.In fact,enormous legal problems,however,are hidden in the current hot equity crowdfunding market due to the lack of legal systems established in China for equity crowdfunding.These legal problems mainly originate from three aspects.Investors are faced with access threshold restrictions,investment frauds,and barriers of the exiting process;financers are confronted with divulgence of commercial secrets,infringements of their own intellectual property rights,and other problems;and crowdfunding platforms face such problems as illegal fund-raising,and vague delimitation of their own legal status and responsibilities.To solve legal problems of equity crowdfunding,it is necessary for lawmakers in China to learn relevant experience in the legislation of equity crowdfunding from other countries and develop corresponding legal improvement measures from three aspects,namely,investors,financers,and crowdfunding platforms.For investors,an access mechanism suitable for their specific abilities should be built,and the market credit system and exiting mechanism should be improved.For financiers,a commercial secret and intellectual property protection mechanism should be established,and for equity crowdfunding platforms,an equity crowdfunding exemption system should be formulated to specify their status and obligations by law.Only if these improvements are made to legal systems,can the equity crowdfunding market in China completely go out of the grey zone of the law and inject vitalities to the healthy development of Chinese market economy.