Anti-dilution provisions

Provisions in a company’s charter and by-laws designed to discourage undesired take-over bids. These take the form of options or institutional equity instruments (eg convertible preference shares), which can be converted to ordinary shares on any issue of new stock in a subsequent round of investment financing or in a take-over bid. The price at which this conversion takes place is determined by the type of anti-dilution provision.See anti-dilution (full ratchet), anti-dilution (weighted average), blank cheque preferred stock, poison pill, shark repellent.