The regulation of illegal fundraising in China

Journal article


Xinmin Liu, Flora Huang and Horace Yeung 2018. The regulation of illegal fundraising in China. Asia Pacific Law Review. https://doi.org/10.1080/10192557.2018.1511086
AuthorsXinmin Liu, Flora Huang and Horace Yeung
Abstract

The rise of financial technology means that it is easier than ever to raise funds from a large group of people, notably via peer-to-peer lending or crowdfunding platforms. This article seeks to discuss the law on illegal fundraising, which has existed for some time before the boom of the Internet, as a legal response to the increasing number of fundraising from the public. Regulation is necessary to ensure market order and investor protection. Virtually in all markets, there are restrictions on how entities can make a public offer of shares, bonds and/or other investment schemes. There are several laws, most notably criminal law, in China that are relevant to illegal fundraising. An individual/company can poten- tially breach one or more of these rules as long as they attempt to raise funds from a non-conventional (i.e. not stock markets or banks) route. The worst outcome of this used to be death penalty. There has been a degree of ambiguities in the application of these laws. The article will attempt to clarify these ambiguities. The regulation of illegal fundraising can have a far reaching conse- quence on the financial markets in China, considering that non- state entities, particularly small and medium-sized enterprises, have limited access to conventional finance. The article will con- sider whether China is on the right track in terms of regulation to allow alternative fundraising channels to thrive. This article is the first ever to present a holistic account of the regulation of illegal fundraising in China.

KeywordsChina; criminal law; financial markets; financial regulation; illegal fundraising
Year2018
JournalAsia Pacific Law Review
PublisherTaylor & Francis
Digital Object Identifier (DOI)https://doi.org/10.1080/10192557.2018.1511086
Web address (URL)https://doi.org/10.1080/10192557.2018.1511086
Publication dates02 Jan 2018
Publication process dates
Deposited06 Mar 2020, 14:34
Accepted03 Aug 2018
ContributorsUniversity of Essex
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