On The Legal Issues Of The Risk Prevention Of Equity Crowdfunding

The equity crowdfunding originated from American, it's a new way of financing with the development of internet. In China, it belongs to the range of private finance. Since appearing our country in 2013, equity crowdfunding breaks the monopoly of traditional financial, and provides a new way of efficient and low cost for minor enterprises to raise funds, which resolves the biggest problem of minor enterprises. Equity crowdfunding is an inclusive finance in substance, which is important to the prosperity and development of China's capital market. However, on the other hand, it is not to be neglected that there is a lot of risk in the process of financing, especially, as the growing number of equity crowdfunding, the potential risk will be bigger and bigger, which will let the consequence of the un-stability of financial market. Thus, how to establish a rational system to control the risk of equity crowdfunding is particularly important.Under the existing law in China, equity crowdfunding is defined as a public and micro equity-financing on internet. As this definition is disjoint with the regulation of criminal law and securities law, equity crowdfunding is still walking in the grey areas. Besides, spurred by interest, fundraisers and leaders may cheat the investors. In addition, because of the equity crowdfunding involving a lot of people, the ownership structure of it is complicated, which brings kinds of equity risk. Finally, the short of withdrawal mechanism makes it hard for investors to achieve the expected return, in turn, it results that of the fundraising activities fail easily. Using foreign experience for reference and according to our national conditions, we can be from two aspects——macro and micro to complete the equity crowdfunding's risk prevention legal system of China. One is to establish the basic principle, such us the principle of the balance between freedom and security, the principle of self-discipline and supervision. The other is to elaborate the specific legal system, such us market access rules of crowdfunding platforms, qualified investors, information disclosure system and so on. Only in this way, can we set up the risk prevention mechanism to protect the lawful rights and interests of investors and maintain the stability of the financial markets.