Withdrawal Rights in Crowdfunding Transactions: The Precontractual Reflection Period (Art 22)

With a view to increasing the level of investor protection within the crowdfunding market, Article 22 ECSPR provides for a reflection period during which prospective non-sophisticated investors can revoke an offer to invest or an expression of interest in a particular crowdfunding offer without giving a reason and without incurring a penalty. That way, it seeks to prevent situations whereby a potential investor, by accepting a crowdfunding offer, also accepts an offer to enter a legally binding contract without any possibility of withdrawal within an adequate period. This Chapter attempts to shed further light on this provision, by analysing its scope of application, the conditions for exercising the right to withdraw and the relevant obligations of crowdfunding platforms. In addition, it briefly discusses the effectiveness of the precontractual reflection period in achieving its stated objectives and puts forward some recommendations for future consideration by EU policy makers.