A Comparative Study Of Sino-America's Equity-based Crowd-funding Legal System

Crowd-funding is a way to raise funds from Internet investors,which takes the advantages of Internet's fast spreading virtue.It is not only a way for small-and-medium-sized enterprises,but also a platform to judge a prodcut and its market prospect.Equity-based crowd-funding originates from Occident and then spreads to the other countries.Year 2014 is the Year One of equity-based crowd-funding in China,compared to other countries,equity-based crowd-funding started relatively late in China,and the environment was not so good as well.However,according to the report issued by World Bank,equity-based crowd-funding has an enormous development potential in development.The market size of equity-based crowd-funding in China is estimated to be $50 billion by the year of 2025.Thus,it is essential to review the history of equity-based crowd-funding in America and draw lessons from it as well.This passage conducted a comparative study between China's and America's equity-based crowd-funding system,from the balance between safety and efficiency anglem,to find legislative gap and shortcomings of China and make different suggestions to different sbujects accordingly.Article structure is as following:Chapter One is the overview of equity-based crowd-funding.First,introducing the concept,value,legal risk and basic transaction procedure of equity-based crowd-funding.Second,clears the legal relationship among Tripartite subject in equity-based crowd-funding,which paves the way for constructing the legal framework of equity-based crowd-funding.Third,compares the laws,regulations and rules regarding equity-based crowd-funding between China and America.Finally,points out the cole problem of equity-based crowd-fundind.Chapter two is about the regulation on Issuers according to China's and America's angel separately.This Chapter aims at distinguishing the different legal status of equity-based crowd-funding by different regulations on issuing.Regulations on Issuers' obligations are insufficient in China while America's regulations,stipulated in JOBS ACT,are relatively comprehensive.Chapter three is the comparative study between China's and America's Investors.It is rather difficult to affirm a qualified Investor in China,which makes equity-based crowd-funding can not play a role in inclusive finance.America's innovative exemption system regarding issuing equity-based crowd-funding shall be discussed in detail.Besides,America sets some rules,such as cooling-off period,a third party agency to escrow funds,to protect Investors by asking Issuers and crowd-funding platform to undertake certain obligations.Regardless of protection rules to Investors of China,there are still a lot of work should be done to perfect the system.Chapter four discusses how America's safe harbor rules improve the financial efficiency.Nevertheless,by comparing the supervisory subjects,principle and environment of China and America,a monitoring mechanism that suits the practice in China will be constructed.America's legal systems,IP systems,credit investigation system and relief system will be referenced.Chapter five will raise some specific suggestions regarding improving fund rading's efficiency and protecting the security of Investor,including establishing issuing exemption system,perfecting information disclosure system,stipulating cooling-off period regarding financial investment,setting safe harbor rules of equity-based crowd-funding platform,constructing transfer and quit system of equity,building credit investigation system and strengthening intellectual property protection.