Research On Protection Of Investors' Rights Under The Leading Investment Of Equity Crowdfunding

Equity crowdfunding is aimed at public investors,with the Internet as a very distinctive platform,with startups and small and micro enterprises as the main financing issuers of the new model financing activities.In recent years,the equity crowdfunding platform has exploded,and this emerging industry with too fast growth will inevitably cause legal supervision was hard to keep pace with its development,causing many problems in its development.Especially in the leader investment mode,the information channel of the normal investors is more limited,and often only relying on the information of the lead investors,it will expose many legal risks to the investors in all aspects.This paper mainly from the perspective of follow investing people,clarifying the legal relationship between the follow investors and other subjects under the lead investment mode,revealing that other subjects have behaviors that are contrary to their duties,and even fraudulent behavior.These behaviors make it possible for the follow investors to be at risk of damage to the interests at all stages of the investment process,so there is an urgent need to protect the interests of the follow investors.The structure of this paper is divided into four parts,which are the introduction of the status quo of China's equity crowdfunding investment and financing model,the legal analysis of the equity crowdfunding and investment model,the analysis of the equity crowdfunding and the risk of investment,equity crowdfunding and the improvement of the investor protection system.The first chapter discusses the status quo of China's equity crowdfunding and investment financing model.This paper introduces the development of equitycrowdfunding in China and the origin of the investment and financing model.It introduces the lead investor mechanism and allows the investment investors to make rational investment under the leadership of professional investors.This model is in line with the development of equity crowdfunding in China.Atpresent,most of China's equity crowdfunding platforms have adopted a leading investment financing model.There are three types of leading investment financing models in China,namely“generation shareholding model”,“limited partnership holding model” and“crowdfunding platform as lead investor model”.The limited partnership holding model is the most widely used equity crowdfunding model.By presenting the trading process of this model,we can roughly understand the process of equity crowdfunding and investment.The second chapter analyzes the legal analysis of the follow investors with equity crowdfunding.By analyzing its legal relationship with various entities,combined with the judicial case and the actual situation of China's current equity crowdfunding market,this paper explores the risks faced by China's equity crowdfunding and investment investment management.In the initial stage of project investment,investors may be subject to separate or joint fraud risks of Fundraiser,crowdfunding platforms and lead investors;in the project management stage,because the financing party cannot guarantee the management and use of funds according to the agreement,it is extremely easy to invest with Suffering from the risk of investment failure;in the exit phase of the project,because of the exit dilemma,the investment may face the risk of not being able to withdraw funds.The third chapter analyzes the causes of the risk of equity crowdfunding and the risk of investment,and sorts out the legislative status of equity crowdfunding in China.In the pre-investment stage,the information disclosure mechanism of the equity crowdfunding fundraiser in China is not full,the crowdfunding platform lacks the access mechanism,the audit is not strict,and the lead investors lack the corresponding restraint mechanism;after the investment,there is a legal blank for the management of financing enterprises.The main body of management supervision of financing enterprises and the content of effective management supervision are not clearly defined;the exit phase does not design a new exit mechanism for the special financing mode of equity crowdfunding,and the follow investment can only through exit from the project company or partnership to exit investment and withdraw funds.But this way is obviously not in line with the equity crowdfunding model.The fourth chapter focuses on the causes of the damage to the rights of follow investors,and improves the system of equity crowdfunding and investment protection.Firstly,improve the industry legal system.First,design a small-issuance exemption system to legalize equity crowdfunding;improve the information disclosure mechanism,set the content,form,degree,integrity,and responsibilities of information disclosure so that investors can obtain comprehensive and real investment information.Strengthen the management norms of the lead investors,stipulate the admission criteria of the lead investors,supervise the behavior of the lead investors,and enter the leading investor's behavior into the credit information system.Secondly,strengthen platform risk management capabilities.Clarify the equity crowdfunding platform access standards,filter the illegal and non-compliant platform,make the equity crowdfunding industry more formalized,and the investment interests can also be guaranteed;clarify the responsibilities of the crowdfunding platform and strengthen its "safe harbor" function,protection the interests of follow investors.Finally,improve the post-investment supervision and construction of the exit path to investors.Clarify the equity crowdfunding platform and the investment management obligations of the lead investors,supervise the financing party to use and manage the funds according to the agreement;build a multi-channel exit path to the follow investors,solve the exit problem to the follow investors,and make them truly obtain investment income.