The Research On The Protection Of Investors In Equity Crowdfunding

Equity Crowdfunding is rises with the development of market economy and Internet technology in recent years,which is a result of combining financial and Internet area.To raise funds for small start-ups by the means of equity crowdfunding,have many advantages,such as quick financing speed,simple procedure and so on,which may realize the expansion of public investment channel,or brings such non-monetary resources as connections and managerial experience for small start-ups.Under the current legal system of China,there are provisions on listing requirements for public placement of shares and bonds in accordance with Securities Law and Corporation Law;however,there are no definite provisions on operation mode and issuance scope of equity crowdfunding.Meanwhile,pilot work on public offering of equity crowdfunding has not stated yet.For purposes of maintaining stock market running smoothly and avoiding systemic risk,equity crowdfunding is only allowed to carry out in private range,and investors are difficult to invest because of the highly admission conditions.In practices of equity crowdfunding,investors face many risks,for instance,information asymmetry between investors and financiers,unexercised shareholder rights,obstructed channels of equity earnings and so on,which may hinder the rapid and healthy development of equity crowdfunding.This study focuses on the issues of investor protection of equity crowdfunding against this background,providing theoretical and practical basis for system construction of equity crowdfunding.Since lead investor and ordinary investor in social relations in which the different status,it should be clear at the outset here is that investor protection in this paper refers to protection of ordinary investor.This paper contains three parts besides abstract and introduction.The first part analyzes the basic theory of equity crowdfunding and investor protection.Equity crowdfunding refers to raise fund by displaying information of financing on the Internet platform,in the form of equity in return for public investment.Compared with bank loan and the other types of crowdfunding,equity crowdfunding has the characteristics of information disclosure,small single amount but a large number of investors,and spinoff effect.In practice,“traction+follow” investment system is the leading pattern of equity crowdfunding,which means professional investors as the tractional investors,ordinary investors as the following investors.The legal relationships between financiers,equitycrowdfunding platforms and investors are different.The investor of equity crowdfunding has the right to protect the security of funds,the right to regret,the rights of shareholders,the right to know,and the right to income,these rights are the basis for investor protection.The second part summarized the investor protection status and problems in our country’s equity crowdfunding practice.The practice of equity crowdfunding includes the legitimacy of equity crowdfunding,the information disclosure,the capital regulation,the qualified investors,the equity earnings,the dispute settlement mechanism and other aspects.At the same time,find out the following problems: private range limited the development of equity crowdfunding,the asymmetric information between investors and financiers,the lack of uniform rules of capital regulation,the access standard of investors is too high,the approaches of equity earnings are not smooth,and the dispute settlement mechanism is ineffective.The third part is the improvement of the investor protection.In the consummation of equity crowdfunding system,use the experience of American JOBS Act for reference,insist on both efficiency and security,based on a small amount exemption system for equity crowdfunding,guided by the regulatory thinking of principle-oriented,and lay a solid legal foundation for the healthy development of equity crowdfunding.Meanwhile,to establish a comprehensive protection system of investors by the following approaches: try to perfect the social credit system,clarify the rights and obligations of financiers,Equity Crowdfunding platforms and investors,and provide various solutions for equity crowdfunding disputes.This paper analyzes some legal issues of investor protection in equity crowdfunding by both theoretical and empirical perspectives.It elaborates the basic concept and financing mode,summarizes the legal relationship between the main parties,and clears justification of the special investor protection.Meanwhile,found out the existing main problems by empirical study of the investor protection reality in China;in the end,combined with the JOBS Act,puts forward several suggestions for the institutional improvements about investor protection in our country’s equity crowdfunding practice.The problems on investor protection in the equity crowdfunding are pointed out more accurately through empirical analysis,based on the existing research results,summarizing and innovating,after that,offering some more reasonable and operational system proposals.