anti-dilution statutes

Anti-dilution statutes are laws designed to protect shareholders from losing value in their investments when a company issues new shares at a lower price than previous ones. When a company raises funds and sells additional shares cheaply, it can reduce the ownership percentage and value of existing shares. Anti-dilution provisions adjust the conversion rate of preferred shares to maintain their value, ensuring shareholders retain their stake and investment worth even during down rounds of financing. This mechanism helps protect investors against devaluation in their ownership and potential losses from subsequent funding rounds.