Anti-Dilution Provision

In the venture capital and private equity context, a provision which protects an equity holder from dilution ( due to subsequent equity issuances (issued either directly or indirectly through options or convertible securities). This protection can be provided by giving equity holders:

For a detailed discussion of anti-dilution provisions, see Practice Note, Anti-Dilution Provisions in Private Equity Transactions ( . For a form of warrant containing standard anti-dilution provisions, see Standard Documents, Warrant (General Form) ( and Warrant (Penny Warrant Form) ( . For an outline of the main issues and negotiating points in the anti-dilution provisions of a general form of warrant, see Negotiating Warrant Anti-Dilution Provisions Checklist ( .

In the context of publicly-traded debt securities convertible into common equity, a provision that protects the conversion value of the security against the impact of a corporate event that transfers company assets from the company to existing common stockholders. For more information on anti-dilution adjustments in publicly-traded convertible bonds, see Practice Note, Anti-Dilution Adjustment Formulas in Convertible Bonds ( .

{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247245052202", "objName" : "ACT_OWNED - READ_ONLY - 0-382-3231", "userID" : "2", "objUrl" : "", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-34f33658:15b17c9cf16:101c", "analyticsSessionCookie" : "2-34f33658:15b17c9cf16:101d", "statisticSensorPath" : "" }