When the company has a complex ownership structure, that is, besides common stock and untransferable preferred stock, there are convertible preferred stock, convertible bonds and warrants, because convertible bond holders can make themselves common shareholders through conversion, warrant holders can buy common stock at a predetermined price, and their behavior choices may lead to an increase in common stock of the company and a decrease in earnings per share. This situation is usually called equity dilution, that is, the phenomenon that earnings per share decrease due to the increase of common shares is called equity dilution. Anti-dilution clause, also known as anti-equity dilution agreement, is common in the field of private equity investment. It is a clause used in the preferred stock agreement. It refers to the measures taken by private equity investors to avoid their own share depreciation and excessive dilution during the follow-up project financing or private placement of the target company. The anti-dilution clause can ensure that the conversion privileges enjoyed by private investors are not affected by stock reclassification, share split, stock dividends or similar practices that increase the number of shares issued without increasing the company's capital. Anti-dilution clauses can be roughly divided into two categories: preventing the proportion of shares in the ownership structure from decreasing and preventing the share from depreciating in the subsequent price reduction financing process. The former involves conversion right and preemptive right; The latter mainly involves the adjustment of conversion price when financing at reduced price.

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Response time: 2021-1-11.Please refer to the latest business changes announced by Ping An Bank in official website.