anti-dilution provision


anti-dilution provision
USA
A provision which protects an equity holder from the dilutive effects of subsequent equity issuances. This protection can be provided by giving equity holders the right to purchase their pro rata share in a subsequent equity offering, the right to receive additional equity at no cost if there are subsequent equity issuances below a certain price (usually fair market value) or the right to approve any subsequent equity issuances.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Anti-Dilution Provision — A provision in an option or a convertible security. It protects an investor from dilution resulting from later issues of stock at a lower price than the investor originally paid. Also known as an anti dilution clause . These are common with… …   Investment dictionary

  • anti-dilution provision — A provision appearing in convertible securities to guarantee that the conversion privilege is not affected by share reclassifications, share splits, share dividends, or similar transactions that may increase the number of outstanding shares… …   Black's law dictionary

  • anti-dilution provision — A provision appearing in convertible securities to guarantee that the conversion privilege is not affected by share reclassifications, share splits, share dividends, or similar transactions that may increase the number of outstanding shares… …   Black's law dictionary

  • Dilution Protection — A provision that seeks to protect existing shareholders or investors in a company from a decrease in their ownership position. The dilution protection feature kicks in if the actions of the company will decrease the stakeholders percentage claim… …   Investment dictionary

  • Provision — A legal clause or condition contained within a contract that requires or prevents either one or both parties to perform a particular requirement by some specified time. Specified requirements can include, but are not limited to, sunset, soft call …   Investment dictionary

  • Stock dilution — is a general term that results from the issue of additional common shares by a company. This increase in common shares of a stock can result from a secondary market offering, employees exercising stock options, or by conversion of convertible… …   Wikipedia

  • Full Ratchet — An anti dilution provision that, for any shares of common stock sold by a company after the issuing of an option (or convertible security), applies the lowest sale price as being the adjusted option price or conversion ratio for existing… …   Investment dictionary

  • Broad-Based Weighted Average — An anti dilution provision used for the benefit of existing preferred shareholders when additional offerings are made by the corporation. The broad based weighted average accounts for all equity previously issued and currently undergoing issue.… …   Investment dictionary

  • Narrow-Based Weighted Average — An anti dilution provision used to ensure that investors are not penalized when companies are undergoing additional financing or issuing new shares. A narrow based weighted average takes into account only the total number of outstanding preferred …   Investment dictionary

  • Antidilutive — A term describing the effects of securities retirement, securities conversion or corporate actions (such as acquisitions made through the issuance of common stock or other securities) on earnings per common share (EPS), where EPS is increased for …   Investment dictionary