A type of antidilution provision that gives the holder of an equity-based security the right to obtain extra shares of stock if the issuing company sells shares, at a future date, at prices below the original purchase price (i.e., the price that the holder actually paid). This provision is less dilutive to the issuing company and holders of common stock who are not protected by the provision than the ratchet antidilution method under which the holder is entitled to receive a sufficient number of free shares to lower his price per share to the same price paid by the new holder regardless of the number of shares sold to the new investor. The weighted-average antidilution method employs a special formula to calculate the dilutive effect of a future sale of reduced-price securities and grants the investor enough additional free shares to offset that dilutive effect.
This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Comments