Anti-Dilution Provision

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DEFINITION of '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."

INVESTOPEDIA EXPLAINS 'Anti-Dilution Provision'

These are common with convertible preferred stock, which is a favored form of venture capital investment.

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