Our country's law does not stipulate that natural persons have the subject qualification of organizing and initiating fund-raising, so private placement is in an awkward position in law. There are no specific provisions in laws and regulations prohibiting individuals from raising funds. ?
However, according to 1999, the Law of People's Republic of China (PRC) Municipality on Donation for Public Welfare clearly stipulates that only legally established public welfare social organizations and public welfare non-profit institutions can accept donations.
Because there is no perfect supervision mechanism, fraud and illegal profit-making crimes caused by temporary spontaneous fund-raising have appeared in some areas.
Public welfare social organizations and institutions established according to law are subject to audit supervision. This kind of temporary fund-raising behavior initiated by setting up individual account organization lacks effective accounting audit and supervision mechanism, and in some cases it may evolve into fund-raising fraud, disguised apportionment and other behaviors.