Anti-dilution

A clause that is built into the terms of convertible preferred stocks and some options to act as a buffer for investors’ investments from potentially losing value. Even when new shares are created and issued that are at a cheaper price than what earlier investors paid for, the earlier stakeholders’ position in the company remains the same. Anti-dilusion provisions can also be called as anti-dilution clauses, subscription privileges, subscription rights, or preemptive rights.

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