Private Placement Under The U.s. Securities Act Definition Of Standards

Currently, there are a large number of private offering cases in China's capital market. However, the law in this area has lagged far behind economic development, there are serious drawbacks in the system and vague standards. Although the new < Securities Law of the People's Republic of China > has regulated private offering, but the system still has yet to clear the legislative goals and defined standards, yet established specific operating rules.In response to this reality, in this paper,under the Securities Act of the United States,the author conduct an in-depth study to define standards . By using comparative analysis, empirical analysis, historical analysis, and economic analysis, we get the following views: (1) The core issue of the private offering legal regime is the formulated definition, it derived from "exempt transactions"under the <1933 Securities Act>; (2) The definition of private offering established two main objectives : One is to promote the financing convenience, the other one is to protect investors. This reflects the securities law to be fair and efficient coordination of value orientation. (3) Through the design of the system, the definition standards successfully reach the balance between issuers and investors, efficiency and equity. When the fair value demand to protect investors in excess of the efficiency demand to facilitate the finance, it is no longer a private offering. This is actually the general standards and principles of article (4) 2 of Securities Act which governs private offering. Based on the above guiding ideology, a large number of federal and state courts cases and the executive explanation promulgated by SEC, further define derived several other standards and factors, such as the"Requirement test"and"Offeree's Qualification".(4) The development of private offering requires for more objective standards and more operational rules, Regulation D promulgated by the SEC in 1982 ensure that the needs are met. 506 rules provide for a "safe harbor" -- as long as the issue is in compliance with the regulation, it will become a private offering automatically and enjoy exemption from registration. This rule significantly enhance the legal certainty andpredictability.Finally, this article analyzes the current situation of China's private offering system and pointed out the problems that exist. The author consider it necessary to draw and transplant the definition and standards for private offering system under the Securities Act issued by the United States, so that to improve our private offering system, and put forward several recommendations and proposals with a view to be helpful to future legislation.