Equity-based crowd-funding

By Wang Peng and Chen Shaozhu King&Wood Mallesons’ Securities Group

wang_pengThe potential for the development of equity-based crowd-funding under the current legal framework

Similar to P2P lending (peer-to-peer lending), equity-based crowd-funding is a kind of public capital raising. Equity-based crowd-funding is a collective effort to provide finance in support of third party projects with a certain portion of equity as reward, incentivizing investors by allowing them a piece of the pie in a budding startup. Crowd-funding is the practice of raising money from the public and is subject to relevant laws governing fundraising, such as The Securities Law, the Criminal Law and various interpretations and opinions on the handling of criminal cases involving illegal fundraising (Fundraising Regulations) by the Supreme People’s Court and other organs.  Equity-based crowd-funding generally involves the transfer of equity in corporations, and is also regulated by the Corporate Law and other relevant regulations.
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