Legal Regulation Research On Equity Crowdfunding

For a long time, the financing difficulty of small and medium-sized enterprises especially of the start-up enterprises is a worldwide problem. With the development of Internet technology and the popularization of Internet application, Internet financial plays an important role in solving the financing difficulties of small and medium-sized enterprises, it makes up for the lack of traditional financial system. Equity Crowdfunding, as a kind of the emerging models in the field of Internet financial, represents the development direction of Internet financial. Currently the Equity Crowdfunding is getting more and more attention in the countries all over the world.Small and medium-sized enterprises bear lower cost of money and consume less time to gain the capital than the traditional financial financing channels when using the model of Equity Crowdfunding. Equity Crowdfunding focus on the development of start-up enterprises, the model effectively stimulates the innovation of the small and medium-sized enterprises and enriches the financing system of the country. It is very popular in small and medium-sized enterprises. However, under the current legal regulation system in our country, Equity Crowdfunding is not allowed by law, and the domestic academic research is relatively scarce. Therefore, we need to study the legal relationships and legal issues of Equity Crowdfunding. At the same time, we need to learn from developed countries of the legislation of Equity Crowdfunding to promote the establishment of China’s own legal supervision system. It is very important for the development of China’s economy.This article is divided into the following three parts.The first part is a general introduction and legal relationship analysis of Equity Crowdfunding. The paper firstly introduces the concept, connotation and the historical origin of Equity Crowdfunding. Equity Crowdfunding is a model of Crowdfunding. It has the common attributes of Crowdfunding and has its unique characteristics form other types of Crowdfunding. This paper briefly introduces several modes of Crowdfunding and the comparison highlights the features of Equity Crowdfunding. Investors, Issuers and the Funding portal are the three parts in the legal relationship of Equity Crowdfunding, this paper mainly discusses the legal actions that the issuers issue securities, the legal position of Funding portal and the investor’s investment behavior in law. The second part analysis the legal supervision problems of Equity Crowdfunding in China from the aspect of obstacles caused by the missing of legal system and from the aspect of specific legal regulation problems. Equity Crowdfunding in China is facing a violation of the “securities law” and it violates the “criminal law” in illegal fund. At the same time, it faces with the problems of corporate governance, equity transfer and circulation, shortage of information disclosure, credit risk, compliance risk in Funding portal and investor protection issues. These issues are to be overcome with the foundation of legal regulatory legislation. The third part attempts to give countermeasures for these problems and challenges. China needs to build legal regulatory system and improve the regulatory actions. This process of funding legal system should learn from other countries’ experience. At present, the Securities Regulatory Commission has been issued draft on the management of Equity Crowdfunding. We have taken out our first step to fund the legal supervision system. In the world, the United States, Britain, France and Italy have all been found formal laws and regulations for management and supervision of Equity Crowdfunding. This will also bring good inspiration to our country. In this paper, the author gives advices to overcome difficulties in building our own legislative supervision system. These advices are based on other country’s experience and the reality of China.