On The Improvement Of The Legal System Of Risk Supervision For Equity Crowd Funding In China

Equity-based crowd funding is a kind of crowd funding,crowd funding is developing rapidly in China by the third wave of the Internet finance, equity-based crowd funding got a lot of attention. Since 2014, P2P、baby products and crowd funding were given the legal status.Equity-based crowd funding initially originated in foreign countries in 2009, although it rises late, it developed rapidly.Equity-based crowd funding entered China in 2011,equity-based crowd funding website “angel crunch”、“Da JiaTou”、“Yuan shihui”equity-based crowd funding platforms have been established, setted off a wave of equity-based crowd funding investment boom in the market. The first example of equity-based crowd funding case was emerged formally in 2013, and the first project of equity-based crowd funding which has secured was appeared in 2014.Equity-based crowd funding is mainly divided into three modes, membership mode、certificate mode and angel mode. The development of the model mainly includes two kinds of with leading investors and without leading investors. But no matter which kind of mode, both have the characteristics of widely people’s geographical distribution and relatively large number of people, this characteristics is inseparable with the nature of crowd funding: "public funding ".But, behind the rapid development of equity-based crowd funding, there are many issues which may cause the problems such as legal risk, professional inadequate, information disclosure which is not standardized, and the lack of credit system. Because the Internet banking has the dual properties of Internet and finance at the same time, equity-based crowd funding as one of Internet banking also has double risk. As a type of financing on the Internet, it has all of the risks of Internet, for example, technical risk, information risk, etc. At the same time, as Internet-based financial, it has the risks of supervision of funds, default risk, etc.In China, the "private equity-based crowd funding financing Management(tentative)(draft)" was introduced by the Securities Association in 2014. Although it was introduced by self-discipline association, but it made relevant agreement of investors access, Internet platforms registration system, etc.Overall, it is China’s official regulation for equity-based crowd funding, give a legal definition of equity-based crowd funding, and giving equity-based crowd funding space for it’s development. Although it has limitation on many aspects, there are many deficiencies as a law of equity-based crowd funding’s development.Compared with EU and the United States, which have made respective adaptation and adjustment for development of equity-based crowd funding, so that equity-based crowd funding get better development within the legal range, China’s legal regulation for equity-based crowd funding started late. Our country performed with many restrictions including investors number and publicity for equity-based crowd funding in the context of the "Securities Act", "Company Law", our country adopted a conservative attitude for equity-based crowd funding instead of following foreign laws to make them appropriate exemptions. But our law in this area has just started, reference to modify direction of foreign law, it can indicate the direction for China’s Legislation and regulatory focus in the future, and can do early prevention for legal risks and vulnerabilities.Throughout the regulatory system, it ultimately need to make its restrictions combined with the nature of equity-based crowd funding according to local conditions. In China,it can start from regulatory,strictly control the platform mechanism which is the important role of equity-based crowd funding, clearly define the rights and responsibilities of the platform, so that can achieve specific responsibilities, stripped out the funds from the hands of the platform, reducing the generation of a pool of money to avoid the breeding of crime. Secondly, the flow of funds, draft banking supervision system in, which can supervised as well as reducing the loss of human and material resources.