A Study of the Regulation of Equity Crowdfunding

• Main Authors: LIN,YU-MEI, 林于湄
• Other Authors: CHANG, HSIN-TI
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/87heth

碩士 === 國立臺北大學 === 法律學系一般生組 === 105 === 　　Within a month of the implementation of the crowdfunding Title III of The Jumpstart Our Business Startups Act in the United States, there has been a total of 39 crowdfunding projects on platforms and websites operated by securities brokers or funding portals. The categories of businesses have been rich and diverse, which demonstrates the attractiveness of crowdfunding. Even though in Taiwan the crowdfunding trend has also been captured by methods such as GISA and securities brokers operate equity crowdfunding, crowdfunding has not had the expected effects and has failed to achieve the objective of establishing a multilayered capital market. The first aim of this study is to try to find out whether there is any shortcoming in Taiwanese law that has caused the rarity of equity crowdfunding and whether the lack of protection for investors has caused them to be hesitant about investing; the second aim is to find a balance between the twin legislative objectives of promoting capital formation and protecting investors in equity crowdfunding. This study begins by offering an introduction of crowdfunding’s origin, concept, classification and areas of application that conflict with Taiwan's current legal system; it then moves on to explore the current specifications of the JOBS Act, and introduces its legislative process and the regulation and content of crowdfunding that eventually passed through SEC; it also explores the shortcomings in Taiwan's relevant provisions. This study also provides a comparative study of the law in United States. Using a systematic analysis as the main focus, it examines the differences between the systems in Taiwan and the United States, and seeks to understand whether Taiwan's crowdfunding system can become more profitable and risk-proof; using a legal and economic analysis, it considers the obligations of issuers and intermediaries to protect investors. 　　Currently, Taiwan only relies on the regulation of GISA and regulation of conduct of equity crowdfunding by securities firms to determine the relevant　ｃrowdfunding provisions of the equity group. Equity crowdfunding should be incorporated into the norms of Securities and Exchange Act so that the substance of the act shall be clear and definite. Also, even though companies of GISA and equity crowdfunding are not public offering company under the current regulation, this study argues that if a company engages in public offering company activities it should be treated as a public company, and that the relevant provisions about securities fraud in the Securities and Exchange Act should apply in order to achieve the purpose of protecting investors. In addition, Taiwan's crowdfunding stock market lacks trading market, resulting in a low level of investors' interest as well as difficulties in proving causation in securities fraud lawsuits. Legislation should be established to enable the securities of equity crowdfunding to be transferable in the stock market. In addition, liberalization and amendment should occur in the disclosure obligations of issuers, the convening obligations of shareholders meeting, the limitation of equity crowdfunding company types, and considerations about the funding size and situations where the fund-raising target tend towards individual investors. Legislation should be stronger on funding portals' obligations of due diligence and investors' education, and communication channels should be established by funding portals to maximize the function of collective wisdom. If fraud occurs in equity crowdfunding, the number of victims is likely to be sizable, and the damage to the integrity of the securities market is likely to be significant. Its outcome is similar to the outcome of a public harm case, and so should be subject to the provisions of Article 277 of the Civil Procedure Law, but the burden of proof should be shifted to the defendant. It is hoped that the above recommendations will maximize the strengths and minimize the risks of the crowdfunding legal regime in Taiwan.