Definition of Dilution

Dilution

Diminution in the proportion of income to which each share is entitled.

Claim dilution

A reduction in the likelihood one or more of the firm's claimants will be fully repaid,
including time value of money considerations.

Antidilution Provisions

A clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership.

Claimant

A party to an explicit or implicit contract.

Contingent claim

A claim that can be made only if one or more specified outcomes occur.

Disclaimer of opinion

An auditor's statement disclaiming any opinion regarding the company's financial
condition.

Equity claim

Also called a residual claim, a claim to a share of earnings after debt obligation have been
satisfied.

Marketed claims

claims that can be bought and sold in financial markets, such as those of stockholders and
bondholders.

Nonmarketed claims

claims that cannot be easily bought and sold in the financial markets, such as those of
the government and litigants in lawsuits.

Residual claim

Related: equity claim

Unclaimed Pay

Net pay not collected by an employee, which is typically transferred
to the local state government after a mandated interval has passed from
the date of payment.

Antifraud Provisions

Specific sections and rules of the 1933 Act and 1934 Act that are
designed to reduce fraud and deceit in financial filings made with the SEC. The antifraud provisions
are Section 17(a) of the 1933 Act and Section 10(b) and Rule 10b-5 of the 1934 Act.

Preferred Stock Stock that has a claim on assets and dividends of a corporation that are prior

to that of common stock. Preferred stock typically does not carry the right to vote.

Claim

Request for payment of benefits under the terms of an insurance policy.

Claimant

Person or party making request for payment of benefits under the terms of an insurance policy.

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