Antidilution Law and Legal Definition

An antidilution clause in a contract often refers to the right of current shareholders to maintain their fractional ownership of a company by buying a proportional number of shares of any future issue of common stock. Most states consider antidilution provisions valid only if made explicit in a corporation's charter. It may also be referred to as a subscription privilege or subscription right or preemptive right. Such clauses protect an investor from dilution resulting from later issues of stock at a lower price than the investor originally paid.