what is an anti dilution provision 
anti dilution provisions are clauses built into convertible preferred stocks and some options to help shield investors from their investment potentially losing value when new issues of a stock hit the market at a cheaper price than that paid by earlier investors in the same stock then equity dilution can occur anti dilution provisions are also referred to as anti dilution clauses subscription rights subscription privileges or preemptive rights understanding anti dilution provisionsanti dilution provisions act as a buffer to protect investors against their equity ownership positions becoming diluted or less valuable this can happen when the percentage of an owner s stake in a company decreases because of an increase in the total number of shares outstanding total shares outstanding may increase because of new share issuance based on a round of equity financing dilution can also occur when holders of stock options such as company employees or holders of other optionable securities exercise their options 