| Equity crowdfunding is a new financial type,which rises in the wave of information technology revolution.Under the downward pressure of the global economic cycle,the legislation of equity crowdfunding has become a trend in worldwide due to the policy-driven of stimulating economy and promoting employment.The attitude of Chinese regulatory authorities to equity crowdfunding has experienced changes from “private” to “public”.Until now it still remains as a concept in the paper and lacks of formal rules.This is also reflected by the fact that the legislator has not yet formed a unified opinion on the matter.Financial fairness is the main reason,which supports equity crowdfunding.However,financial fairness is a long-term goal and an ideal vision,as a result its degree of realization cannot be divorced from the reality of social and economic development.First of all,an investor with low maturity participates in a high-risk area of investment.Secondly,information asymmetry has not fundamentally changed by the Internet.Thirdly,the current social credit system construction is not perfect.Based on the above arguments,excessively advocating both financial fairness and financial efficiency will greatly increase the risk of investors.The conflict of multiple legal values is the deep-seated reason why the risk of equity crowdfunding control is out of control.Thus financial security should be placed in priority in the value spectrum of equity crowdfunding.This is one of the contributions of this dissertation to rethink the deviation between the ideal value and the realistic value in this field.The realization of financial security needs to be regulated by appropriate safety regulations.First of all,the choice of the issue exemption on equity crowdfunding should be classified as a small public offering exemption.Secondly,although the investment quota can ease the contradiction between risk tolerance and high-risk investment,it is not enough to solve the negative impaction on investor protection by a lower financial entrance threshold.Therefore,it is necessary to use information tools to reduce information asymmetry,and the mandatory information disclosure is still necessary.Internet economy is also a credit economy,so that the penalty of dishonesty as a credit constraint will be more important.Thirdly,the allocated duty of investor suitability to the equity crowdfunding platforms can also make contribute to matching asset risk to investor maturity.Whether the benefits from the risk allocation or the platform’s functions,they both support aggravating the responsibilities of the crowdfunding platform.Finally,based on the weakness of common investors,it is necessary to make more protections to common investors,such as the cooling-off period system,the fiduciary duty of lead angel and the appropriate exiting channels.The second contribution of this dissertation is the research on the regulation mode of the equity crowdfunding which takes safe development for the primary.Expect the introduction and the conclusion part,this dissertation is divided into six chapters,which can be divided into three parts.The specific structural arrangements are as following:The introduction states the background and the significance of this study,the research route and the research methodology,as well as summarizes the main innovations and the shortcomings within this paper.It also makes a literature review.The first part is the basic theory and the risk analysis of equity crowdfunding.This is the first chapter of this article.The first chapter defines the concept of equity crowdfunding.In general,equity crowdfunding needs to be met with the following elements.Firstly,the specific financing intermediary is a website platform;secondly,a large number of individuals have a small financial investment on a company;thirdly,the consideration on the capital formation is the project company’s stock.At present,there hasn’t been a real equity crowdfunding to public in Chinese practice.Therefore,the objects of this study include not only the so-called public equity crowdfunding,but also the so-called private equity crowdfunding that is titled as the Internet non-public equity financing by the statutory law.As a branch of Internet finance,equity crowdfunding is not just a copy to the customary equity investment.Its significances manifest more financial facilitation of the channel innovation than to reduce information asymmetry through large data and to improve financing efficiency.However,this is bounded up with the Internet ecosystem such as social interconnection and supply chains.Otherwise,the reality is that,the Internet technology not only takes less effect on the reducing customary asymmetry information,but also raises new asymmetry information owing to lack of investigation and interaction.The legal scope of “security” is difficult to cover its substantive boundaries in China,and as a result,has caused equity crowdfunding to be blamed for illegal security issuances.The issuer and crowdfunding platform mainly bore the risk of illegal fundraising.The risks to investors include: high business risk of start-ups,higher risk of fraud and moral hazard,and various risks on corporate governance.The risk distribution is imbalance because investors face more risks than the issuer or the platform.Therefore,the risk control is a main line throughout this dissertation.The choice of legislative value is also based on how to control the risk better.The value of legislation can be the most basic guide for the construction of a specific system,so it is a problem which needs to be clear at the beginning.The discussion about legislation value conflict and choice in Chinese equity crowdfunding is the second part,which is corresponding to the second chapter.According to the view of economic law,the value of financial law mainly refers to the value of financial regulatory law.There are multiple values,including financial efficiency,financial security and financial fairness.Conflict between multidimensional values in financial law is the starting point for a series of risks from equity crowdfunding.Financial fairness requires financial services to benefit more groups.Today,financial fairness refers to lower entrance standard.Of course,the reduction in the financing threshold for financiers is also a benefit of financial fairness.Traditionally,immature investors have been banned from investing the high-risk financial assets.Equity crowdfunding precisely breaks this banner.This breakthrough will certainly help achieve financial inclusion and enhance financial efficiency,but it also brings a mismatch between risk and affordability.Therefore,it is subject to make financial security for primary legislative values.Financial security priority does not deny other values.Through the emphasis on the execution of financial security,the goal is to achieve a balance between investor protection and financing facilitation,which is represented by matching the investor protection standards to the industry risks.The final purpose will promote the sustainable development of equity crowdfunding.It must be admitted that the overall development trend of Internet finance is indeed financial inclusion,but it cannot replace the current development stage with the ultimate ideal value.Financial regulation is always in the chaos cycle.The balance between financial efficiency and financial security always appears to shift from time to time.At present,both the maturity of Chinese investors and the construction of the internet ecosystem are the realistic basis of financial security priority.The moderate financial regulation and the innovation in investor protection methods are some necessary factors in achieving security values.The third part has discussed the realization of financial security by the specific rules on equity crowdfunding,which corresponds to the third chapter to the sixth chapter.The third chapter discusses the types of issue exemption.The different options for public offering or private placement will lead to a completely different path.This problem will shape the systems design and is discussed from the fourth chapter to the sixth chapter.As a factual behavior of security issuance but without permission of the securities regulatory department,the nature of equity crowdfunding is issuance exemptions.In general,security issuance exemptions include private placement exemptions and small public offering exemptions.The former was exempt from registration due to its specific issue object.The latter is registration non-economic by the cost-benefit analysis.Crowdfunding exemption combines the “public” with “private” factors: “public” factors mean it faces the public investors without any restrictions;“private” factors are the classification by the total amount of investment money according to the annual income(or net assets).In fact,Title II of the JOBS Act relaxes conditionally the standard in public offering to some extend,and in Title IV of the JOBS Act,the small issue exemption(A + Regulation Tier 2)is provided.It reflects the trend of the public offering and private placement issue of mutual integration.Many types of issuance exemption in the United States will also create substitution effects between each other,but this issue does not appear in China,because there isn’t issuance exemption in Chinese security law.Whether broadening the scope of qualified investors under the framework of the private placement,or giving limit amount investment money to the public investors,the gap becomes gradually less and less different in the qualification access of investors.If private placement is operated completely through the Internet online,it is inevitably integrated into the nature of public inducement.The above-mentioned facts will more and more blur the boundaries between private placement and public placement.Ideal choice is investment quota in public placement model rather than lower qualified investors in the private placement model.Because common investors are lack of the ability of game and consultation so public offering mainly relies on regulatory governance instead of contract governance used in private placement.As to the internet private equity financing,its value lies in filling the blank of private placement,rather than being a practice of equity crowdfunding.Currently in China,non-professional investors only have access to the indirect financing in the field of private equity.The establishment of the issuance exemption will release the legality risk on equity crowdfunding.The standard for exemption must be set by the factors which support system reasonably: the small amount of financing and the small amount of investment.Finance needs to serve the real economy,to encourage productive efforts rather than to allocate efforts.As a result,the financiers need to be limited to small or micro enterprises that produce real goods.How to achieve the safe development when the issue exemption exempts from the registration or approval by securities regulators? This is discussed by the fourth chapter,the fifth chapter and the sixth chapter.The issuer of the equity crowdfunding is a start-up enterprise,and the risk of business failure is naturally high.It is difficult for common investors to distinguish business risk and fraud risk.Even if there is fraud,the investor may win nothing because the start-up business is too small to have adequate property available for compensation.Therefore,the risk prevention mechanism in ex ante is more effective than the ex post action.It must be given a corresponding focus on mechanism design.The lack of issuance exemption system is a legislative shortcoming.Then the following chapters focus on the discussion about how to improve and perfect credit system and execute enough regulation.The fourth chapter revolves around information disclosure and credit constraint by crowdfunding issuers.Due to the lack of some uniform and clear standards,information disclosure is in confusion in China.It is necessary for regulatory rules to set out the appropriate content and frequency on mandatory disclosure,but also to encourage voluntary disclosure.The legal liabilities which had violated the disclose information system in equity crowdfunding,shall be applied as the security false statements.Internet economy is a credit economy.So credit constraints may be more effective on preventing issuers’ misconduct.As to the current situation,not only credit data is not complete and out of sharing,but also market exclusion rule is in blank.Therefore,it’s time to establish comprehensive dishonesty disciplinary system,which includes administrative discipline,market discipline and judicial disciplinary.The legal nature of crowdfunding platform will determine its primary responsibilities and prohibition obligations.As an intermediary,the platform is in the most advantageous position to prevent the risk.The confidence on the platform is an important factor for the success of transaction.As a result,it is reasonable to strengthen the responsibility of the platform.Rights and obligations are concomitant with each other.Currently,the equity crowdfunding platform is limited to a pure information platform,which looks like an online advertising portal.Transition trend of most platforms also provides a footnote for such an inappropriate status.And the information intermediary is relative to the credit intermediary,as long as it is not towards the pool of funds and indirect financing,pure information platform for the legal status of the transcendence does not constitute a credit intermediary.The platform to a certain extent is the regulatory arbitrage of financial transfer media upon traditional financial institutions,but it should not be raised with too high responsibility.Therefore,regarding it as a special financial service institution with its independent license management is a better choice,and is allowed to provide a certain investment advice.In this position,the platform is assumed to take the duty of investor suitability deservedly.The platform involved in the project company’s post management is only funding monitoring.Although it is based on the positioning of information intermediaries,it requires the investment funds to be deposited and operated by a third party depository.The investor protection rules in the past only limit the general investors’ market access,it is lack of improving the investor’s ability to obtain information,and this is the meaning of information discovery.This is the content of the fifth chapter.The sixth chapter has discussed a special protection for investors.All investors can be classified as financial consumers.But based on the idiomatic usage of securities law,we still use the expression of “investor”.Internet technology offers real-time communication,so that investors have lost withdrawal possibility when he occurs wrong operation.Asymmetry information and limited knowledge of non-professional investors,will lead to a negative impact on investment decisions.Balance the rights of each party should be established,i.e.the cooling-off period rule.Legal angel’s fraud risk and moral hazard is a neglected matter.Investment decisions by following investors are often based on the trust on legal angel.To a certain extent,it can be considered to invest the judgment by legal angel.Therefore,legal angel affords weaken fiduciary duty which is lower than private manager of PE.The difficulty of exit is an important threat to investors’ financial security.Therefore,although the low liquidity is the inherent characteristics of the equity crowdfunding,for the special protection for investors,it can orderly establish a secondary market for equity crowdfunding.The conclusion is the review of the main viewpoint.This dissertation discusses this situation: investor maturity does not match the risk of financial asset,while the information is asymmetric.The reasons for choosing the security development and the proposal for achieving the goal are the academic arguments of this dissertation. |
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