Research On Protection Of Equity Crowdfunding Investors

According to the current Securities Law,the issuance of securities issued to the public is defined as public offering.In the absence of Small Exemptions System under the Securities Law System,the offering on the Internet is absolutely illegal.As a result,Equity Crowdfunding with the characteristics of "Popular,Small Amount,Public" has no legitimacy in China,and it does not exist,in the other words,it is replaced by the " Internet Non-public Equity Financing".In addition to the lag of the above-mentioned laws,the legal risks faced by the Equity Crowdfunding investors are also from the absence of the Securities Group Litigation System.The absence of such System makes the ordinary investors unwilling to pass litigation in order to achieve their own rights and interests of the maintenance when they are in the occasion of infringement.Because it is uneconomic.In addition,ordinary investors inevitably face all the risks inherent in all securities investment,Information Asymmetry.And in the field of equity,the illicit of financier and the leader investors under the mode of "Leadership + With the Vote",the catalytic role of the Internet on the lemon market and the "negative" nature of ordinary investors,will amplify the information asymmetry risk.Although Equity Crowdfunding is currently presented in the gap between the survival of the situation,but the start-up enterprises and the ordinary investors who are lack of professional investment knowledge still have a great market demand on Equity Crowdfunding.Therefore,it is imperative to make Equity Crowdfunding legal.In the field of comparative law,mainly regulate Equity Crowdfunding from financiers qualification,equity ownership platform qualification and and investor qualification.And the legislation of USA,“The JOBS Act “of the United States and “the Equity Crowdfunding Regulations” is representative in protecting the legitimate rights and interests of ordinary investors.In the promotion of equity market development,the "JOBS Act" and " Equity Crowdfunding Regulations" creates small issuance exemption system for start-up enterprises to provide a new financing channels for them.In the construction of the investors protection system,the "JOBS Act" and the "Equity Crowdfunding Regulations " creates investor quota system into the Equity Crowdfunding which is derived from the private equity investment,and it reflects the principle of investor appropriateness.At the same time,it creates the concept of "Fund Raising Portal" which is different from traditional securities company,lowering the access threshold of equity platform,and then restricts the position of "Fund Raising Portal" to the role of pure intermediary platform in order to build communication channel to deal with information asymmetry.Information disclosure is a mechanism to deal with the problem of information asymmetry from the perspective of financier.From the investor’s point of view,it is also a good choice to establish Investor Proper System.Comparative law,usually make classification of investors on investor assets,investment experience and awareness of risk of the product and other factors,in order to create a limited number of investors may bear the risk.To his mountain of stone,we attack the jade.China’s introduction of the Small Exemption System is the name of the stock,so as to fit the development trend of building a multi-level capital market,while China’s "Securities Law" on the "securities" concept is too narrow.Thus Equity Crowdfunding can be included in the "Securities " category is the first step of introduction of the Small Exemption System,the main legal dilemma.What is happening is that the revision of the “Securities Act” is underway and the concept of "Securities" is widening from the relevant draft.As for the "small" definition of the standard,I believe that the use of large data technology will help to analyze the amount of money of "Internet non-public equity financing" and then to determine a specific amount.In the construction of the investor proper system,the key is the classification of investors.In the division of investors,especially the general investors,should be based on investment quotas.Making full use of large data age information processing and analysis capabilities to build a historical transaction profit and loss record supplemented by the investment limit floating up and down supporting mechanism is a great choice.To make up for the lack of subjective judgment,it is a good and feasible choice.In addition,the norms and guide the operation of Equity Crowdfunding Platform is also the key to the protection of ordinary investors.The sole intermediary institution that carries out the Equity Crowdfunding participation as a stakeholder should take full advantage of its self-regulatory role in the market and ensure that the information disclosed by the financier,the leading investor and the general investor are true and effective from the source.Providing and improving exchange channels where investors can exchange information is important.At the same time,the platform should be convenient for the general investors who are in the disadvantage of information to facilitate collective exercise,especially when the rights and interests of the investor is offended.The specific investors are able to notify all violations Investors through the exchange platform provided by the communication channel that they are willing to act as a proxy and want to be authorized by the investors’ offer,in order to make up for the absence of collective lawsuits in the field of securities law.