By Xiang Anbo and Wang Nian, Research Team on “Invigorating Vitality of Innovation Entities”, Enterprise Research Institute, DRC

Research Report No.3, 2017 (Total 5078) 2017-01-10

Abstract: Equity-based crowdfunding is an Internet-based financing means through open market operations. Equity-based crowdfunding enterprises, like listed enterprises, raise funds from private investors, but they do not have legal recognition, and lack corresponding institutional regulations as well as a sound corporate governance structure, which have landed them in a plight for further development. Equity-based crowdfunding could help construct a socialized financial service system and also meets China’s current need of inclusive finance to promote mass entrepreneurship and innovation. In order to facilitate economic development, the government needs to adjust and revise correlated laws and regulations to ensure the legality of equity-based crowdfunding, which is the foundation for its survival and a benchmark to review its market operation. Related governmental departments including China Securities Regulatory Commission need to improve the regulations for the equity-based crowdfunding market to guarantee its regulated development. The government also needs to guide equity-based crowdfunding enterprises to make use of Internet technology and establish a relatively sound corporate governance system with affordable costs and self-oversight and in light of market performance, enhance their capabilities for sustainable and regulated development and thus consolidate the basis for their sustainable growth.

Key words: equity-based crowdfunding, corporate governance, regulated development