When raising money for a business, only talk face to face with relatives, friends, and employees—don't solicit publicly on Moments or in groups, and don't let relatives recruit further for you

Borrowing from relatives, friends, and employees, or taking them as co-investors, is not itself a crime. The crime is public promotion, taking money from strangers, and promising principal-and-interest repayment or returns. Taking in 1000000 yuan, or money from 150 people, meets the criminal threshold—starts at up to 3 years. Money used mainly in normal production, and fully repaid before indictment, may avoid criminal punishment.

Cost

No money. Borrowing or bringing in shareholders: only approach relatives, friends, and employees you know, one by one, face to face. No Moments posts, no group posts, no flyers, no pitch meetings. If a relative says «I'll ask others for you», stop that on the spot. The hard part is when cash is short and «pull in a few more people» looks like the fastest money.

Benefit

Criminal Law Article 176 covers «illegally absorbing public deposits or absorbing them in a disguised form, disrupting financial order». Up to 3 years' imprisonment or short-term detention plus a fine, or a fine alone. Huge amounts or other serious circumstances: 3–10 years. Especially huge amounts or other especially serious circumstances: 10 years or more. An SPC judicial interpretation says all four conditions must be met: (1) no lawful permit from the relevant department, or taking money under a shell of lawful business; (2) public promotion through the internet, media, pitch meetings, flyers, phone messages, or similar channels; (3) promising to repay principal and interest or give returns within a period in money, goods, equity, or similar form; (4) taking money from unspecified members of the public. The same article continues: «Absorbing funds from specific persons among relatives, friends, or inside a unit without public promotion is not illegal absorption or disguised absorption of public deposits.» But a joint SPC–SPP–MPS opinion carves out two exceptions that still count as taking from the public: (1) when taking from relatives, friends, or employees, you know they are collecting from strangers for you and let it happen; (2) you first hire outsiders as employees in order to take money from them. Criminal lines trip on any one of three: 1000000 yuan or more absorbed; 150 people or more; or direct losses of 500000 yuan or more. 5000000 yuan or more, 500 people or more, or losses of 2500000 yuan or more move into the 3–10 year tier. Amounts are counted on the full sum taken in. If the money was used mainly in normal production and operations, and the full amount taken is repaid before indictment, criminal punishment may be waived. Significantly slight harm may not be treated as a crime. Below the criminal line there is still administrative penalty: the local lead department for illegal fundraising fines 20% to 1 times the amount raised. For unit fundraising, the legal representative and directly responsible persons «are given a warning and fined 500000 yuan or more and up to 5000000 yuan» (nationwide; interpretation effective 1 March 2022).

Notes

Once labeled illegal fundraising, relatives who lent you money also lose. Article 25 of the regulation says losses from participating in illegal fundraising are borne by the people who put the money in. Article 19 also names a common business form: taking money while selling goods, providing services, or investing in projects by promising money, equity, or goods returns. Store prepaid cards or membership cards that also promise rebates or dividends, sold to strangers, fall under that article. When cash is short, safer paths are bank loans, or converting money to equity written into a partnership agreement—see item 28. How lenders protect themselves: section 5, item 6 («high return», «principal guaranteed», «sure win»). How older people protect themselves: section 17, item 5 (don't touch «invest for retirement»). Primary beneficiary: yourself; next, relatives who lent to you.

Sources · 4

1. 全国人大常委会 (2020). 刑法修正案（十一）（第十二项，即刑法第一百七十六条）. spp.gov.cn/zdgz/202012/t20201227_503682.shtml
2. 最高人民法院 (2022 修正). 关于审理非法集资刑事案件具体应用法律若干问题的解释（法释〔2022〕5 号修正，第一、三、四、六条）. court.gov.cn/fabu/xiangqing/346901.html
3. 最高人民法院、最高人民检察院、公安部 (2014). 关于办理非法集资刑事案件适用法律若干问题的意见（第二、三点）. spp.gov.cn/zdgz/201404/t20140401_70180.shtml
4. 国务院 (2021). 防范和处置非法集资条例（国务院令第 737 号，第二、十九、二十五、三十条）. gov.cn/zhengce/zhengceku/2021-02/10/content_5…