Research On Legal Protection For Investors’ Interests Of Chinese Equity Crowd-funding

Equity Crowd-funding, which is on the base of the Internet, provides a new financing mode for start-ups and small companies that plan to raise funds from ordinary investors. It has very significant influence in stimulating the vitality of financial markets and establishing a multi-level capital market. Investors are important participants in the capital market, so protecting the interests of them are related closely with the development of the Equity Crowd-funding and the stability of the financial market. Because there are congenital defects in the protection of investors’interests in the system of Equity Crowd-funding, and the development is still in its infancy, investors are facing many risks, establishing legal mechanism to protect the interests of investors is very urgent mission for our government.In China, Equity Crowd-funding is developing prosperously and the number of the platforms of Equity Crowd-funding is increasing rapidly in recent years. Now, there are about dozens of such platforms, for example, the Angel Crunch and the Dajiatou. We can understand better the actual development situation in our country through the analysis of platforms’main operating modes, including the business scope, the specific operation process, the qualifications of investors, the specific rules of investment, the management mode and so on. We can find that there are many loopholes in the regulation about Equity Crowd-funding, which results in investors facing a lot of risk, such as fraud risk, financial risk, risk of leaking information, etc.Along with the development of the Equity Crowd-funding in China, Chinese government begin to pay more attention to regulation about Equity Crowd-funding, working on related legislation. The Securities Industry Association’s documents on the management about Equity Crowd-funding make clear that the registration of platforms, the qualifications of investors and the responsibility of fund raisers, etc. These documents play a role in promoting the development of the Equity Crowd-funding, but there is a large gap between them and the actual development situation.Thinking about the regulation of Equity Crowd-funding and the operation mode of the existing platform in China, we can come to a conclusion that there are not effective measures of protecting investors. Firstly, the provisions of the Securities Law and the Company Law and other laws in our country result that there are many disputes about the legality of Equity Crowd-funding. In addition, there are not corresponding regulatory agencies, regulatory measures and regulation. Secondly, the rights and obligations of the platforms are still ambiguous. Finally, the system of social credit is not impeccable, and the information asymmetry occurs between participants in Equity Crowd-funding market.Based on researching the current situation of the development of Equity Crowd-funding in American and British and other countries, we could understand that the legal mechanism of protecting the investors’interests all have been established in these countries. Furthermore, these countries all have formulated perfect regulation about the qualifications of investors and the responsibility of fund raisers, platforms. China should learn from these countries.To reinforce the legal protection for investors who participate the Equity Crowd-funding, Chinese government should perfect the Securities Law, and other relevant provisions to provide institutional basis for Equity Crowd-funding firstly. Then, the qualifications of investors and the responsibility of fund raisers, platforms and other matters should be cleared. Ultimately, Chinese government should set up a comprehensive regulatory system of Equity Crowd-funding, strengthen self-discipline in the Equity Crowd-funding market and improve the system of social credit to reduce investment risk.