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Glossary

Investment cancellation

The investor's right to cancel a Reg CF investment commitment, the 48-hour cutoff, reconfirmation after a material change, and what happens to the funds.

Investment cancellation is an investor's withdrawal of an investment commitment before the offering closes. Under Rule 304 of Regulation Crowdfunding, an investor may cancel for any reason until 48 hours before the deadline in the offering materials. After that point the commitment can be cancelled only in the situations the rule describes, such as a material change.

The rules

  • Unconditional right to cancel. Until 48 hours before the offering deadline, an investor may cancel a commitment for any reason, and the intermediary returns the funds.
  • Early close. If the target is met before the deadline, the issuer may close early only if the offering has been open at least 21 days and investors receive notice of the new deadline at least five business days in advance. The right to cancel runs until 48 hours before the new deadline. See rolling-close.
  • Material change. If the offering changes materially, for example through a Form C/A, the intermediary notifies investors, and a commitment is cancelled unless the investor reconfirms it within five business days of the notice.
  • Offering fails. If the target is not met, or the offering is cancelled, all commitments are cancelled and the funds are returned.

In every case the funds come back from escrow through the intermediary, which must send each investor a notice of cancellation.

Regulation A+

Regulation A+ has no federal cancellation right equivalent to Rule 304. Whether and until when an investor may revoke a subscription depends on the subscription agreement and the offering-circular.

Why it matters to measurement

A Reg CF commitment is provisional until the offering closes. Ad platforms count a conversion when the checkout completes, and later cancellations never reach them, so reported results drift above final investments. A raise dashboard should show cancellations as their own line and reconcile to the intermediary's ledger. See cost-per-investor and server-side-tracking.

Further reading

  • A measurement dashboard for a raise
  • CRM and email for a raise
  • Reg CF forms explained
  • Oversubscription in a raise

This page is general information about securities rules, not legal advice.

Topics:glossarycrowdfundingregulation

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