DEFINITION of '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, anti-dilution, and anti-greenmail provisions.


Provisions were created to protect the interests of one or both parties named in a contract or legal document. For example, the anti-greenmail provision contained within some companies' charters protects shareholders from the board wanting to pass stock buybacks. Although stock buybacks can be a good thing for shareholders, some buybacks allow board members to sell their stock to the company at inflated premiums.

  1. Assignable Contract

    A futures contract with a provision permitting the contract holder ...
  2. Incontestability Clause

    A clause in most life insurance policies that prevents the provider ...
  3. Anti-Dilution Provision

    A provision in an option or a convertible security. It protects ...
  4. Sprinkling Provision

    A provision within a life insurance agreement that allows the ...
  5. Dead Hand Provision

    A stipulation on a defense mechanism (or poison pill) used by ...
  6. Anti-Greenmail Provision

    A special clause located within a firm's corporate charter that ...
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  1. What is an evergreen provision and how does it affect shareholders?

    It is common for publicly-traded corporations to provide more than just regular salary compensation to their management and ... Read Full Answer >>
  2. What happens when a company buys back its shares?

    When a company performs a share buyback, there are a few things that the company can do with the securities they buy back. ... Read Full Answer >>
  3. How are joint ventures regulated in the United States?

    Joint ventures are a very specific type of business arrangement. They can be organized in several different legal structures, ... Read Full Answer >>
  4. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  5. How do a corporation's shareholders influence its Board of Directors?

    The 21st century has seen a rapid increase in shareholder activism, such as the general awareness, involvement and influence ... Read Full Answer >>
  6. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>

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