WHAT IS THE PURPOSE OF THE RIGHT OF WITHDRAWAL? - ProProfs Discuss
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What is the purpose of the right of withdrawal?



Asked by Ellsworth, Last updated: Dec 18, 2019

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John Smith

John Smith

Answered Sep 08, 2016

Right of withdrawal is a statutory right of the purchaser. since an investor canpurchase securities before he or she reviews the selling documents such as aprospectus and any prospectus amendments, and the investor has the right to reviewthe material information pertinent to the issuer, the investor can withdraw from thepurchase agreement within two days of receiving the documents. the idea is that ifyou buy before you see the prospectus and any amendments to the prospectus, youhave the opportunity to review the documents and if you dont like what you see, youcan withdraw from the purchase agreement - no questions asked. in such a case, theissuer is required to give back your money.
 

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