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by Undo Capital
December 15, 2025
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What are Non-Dilution Rights?

Non-dilution rights are protections that help investors preserve their ownership percentage when a company issues new shares in future funding rounds.

Non-Dilution Rights Meaning

The non-dilution rights mean that it centres on protecting early investors from excessive ownership reduction. To define non-dilution rights in practice, these protections may take the form of anti-dilution adjustments, preferential conversion terms or the right to purchase additional shares to maintain a set stake. A clear non-dilution rights definition is especially important in down rounds, where new shares are issued at a lower valuation. These rights stand for the stability of economic interest and safeguard long-term investor value as the company raises further capital.

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Disclaimer: Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. We do not provide investment advice, financial advice, or tax advice, nor are we regulated by the Financial Conduct Authority (FCA). Participating in startups and early-stage enterprises carries inherent risks, including limited liquidity, absence of dividends, potential loss of investment, and dilution. Any decisions regarding investments should be made independently by the investor as part of a well-diversified portfolio.