Canada    FinTech Guide    Chapter 5    China


5. Crowdfunding / Crowdinvesting / Crowdlending
China  China

In recent years, the personal property and disposable incomes of citizens has increased rapidly based on the development of the economy of China. There is strong demand for wealth management which provides the attractive market to the FinTechs in the area. The crowdfunding became very popular in 2015 and 2016.

Currently, the registration authority is very conscious to approve the entity with the business scope of “Investment”. Further, the investors become more conservative to use the crowded funding platform.



Legal Affairs


There are two models for donate-based crowdfunding in China:

  1. the donate-based crowdfunding platform is a charitable organization itself; and
  2. the donate-based crowdfunding platform is not a charitable organization itself and it cooperates with qualified charitable organization and release fundraising information as an information platform.

The reward-based crowdfundingis operated just like presale in China. The manufactures post a reward-based crowdfunding note on the platform and the customers can join in. After the products are manufactured, the manufacturers can deliver the goods to the customers based on the information collected through the platform.

In this event, the platform of reward-based crowdfunding shall obtain the ICP license to telecommunication authority. It is worth being aware that the foreign investment in the FinTech applying for ICP license shall be no more than 50%. The FinTech shall meet the relevant requirements to get ICP license, such as the capital no less than RMB 1 million(for provincial license) or RMB 10 million (for national license), proper premises, employees and funds etc.

According to the applicable laws and regulations, the equity based crowdfunding services shall be conducted through the qualified equity-based crowded funding platform. At this stage, the typical equity-based crowded funding platform has not actually approved by CSRC in China. Upon the detailed rules being issued by CSRC, the legality of FinTechs in this area may become firmer.

In China, the regulatory on the crowdlending is similar as the one on loan services. Please refer to our reply to this section for details.

 



Economic Conditions


By the end of the first half of 2018, there has been 854 crowded funding services providers, among which 251 are active. The total financing amount through crowdfunding has been more than $2 billion in the first half of 2018.



Contributing Authors

JunHe LLP

Norah Yinuo Zhang
Beijing, China

Search by:

Chapter Index:


1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

Disclaimer:
The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 August 2019