Investor Protection In Equity Crowdfunding

This dissertation consists of three parts: The introduction,the main body,and the conclusion,and the main body is further divided into the general theory,the first and the second chapter,and the specific provisions,the following three chapters.The first chapter of the main body describes the fundamental principles of investor protection in equity crowdfunding.In this chapter,the author first corrects the wrongful dichotomy of public offering and private placement of equity crowdfunding,and points out that public offering is inherent in the concept of equity crowdfunding,then proves the nature of equity crowdfunding to be the financing behavior of startup and small businesses to publicly offer securities,and analyzes the investment relationship between investors and issuers,and the brokerage relationship between the crowdfunding platforms and issuers as well as investors.The second chapter discusses the necessity and feasibility of creating equity crowdfunding in China,analyzes in detail the three main risks equity crowdfunding investors face: the risk of business failure,the risk of fraud,and the risk of equity shares being diluted in the future,and proposes to amend the Securities Act of China to exempt certain small public offerings from approval,allowing equity crowdfunding to fit in with the current Chinese public offering system.Also in the second chapter,the author observes the “poor and blank” status quo of the investor protection legislation regarding equity crowdfunding in China,and proposes that under the principle of “benefits preferred and fairness concurred,” measures to protect equity crowdfunding investors can be designed from three aspects: the crowdfunding platforms,the issuers,and the investors.The first chapter of the specific provisions observes how the JOBS Act and the Regulation Crowdfunding require crowdfunding platforms to protect investors,and learning from the US,the author suggests that China design specific systems of protecting investors by crowdfunding platforms from the following five aspects: investor education,crowdfunding platforms’ check of issuers and crowdfunding projects,the proper use of third party funds escrow accounts,the construction of communication channels,and the restriction of crowdfunding platforms from providing investment advice.In the second chapter of the specific provisions,the author emphasizes the information disclosure by equity crowdfunding issuers.Learning from the disclosure contents and methods of the US,by realizing the necessity of disclosure,we must require meaningful disclosures by the issuers;from the limitations of disclosure,the author suggests that China mandate standardized disclosures and disclosures of limited complex information.In the third chapter of the specific provisions,the author thinks about how to protect investors from the respect of investors themselves.If investors meet business failure,then we may learn from the annual aggregate limits on individual investor contributions in the US to stop investors’ loss;if the startup businesses succeed,we should provide contract provision arrangement and mandatory provisions to protect investors’ equity shares from being diluted by investors in the following financing rounds.