Business, Legal & Accounting Glossary

Definition: Dilution

What is the dictionary definition of Dilution?

Dictionary Definition

  1. The action of the verb dilute.
  2. The process of making something dilute.
  3. A solution that has had additional solvent, such as water, added to it into order to make it less concentrated.

Full Definition of Dilution

Dilution is the reduction of fractional ownership of each of a company’s existing shareholders by the issuance of additional shares. A common method of dilution is the conversion to common stock of other securities, such as convertible bonds or preferred stock. Dilution also occurs when new shares are issued because the company sells more shares to the public, or pays for an acquisition with shares. An anti-dilution clause may allow current shareholders to avoid dilution and preserve their fractional ownership by providing the right to buy a proportional number of shares upon any issuance of new shares to other shareholders. In many states, the anti-dilution clause, or anti-dilution provision, must be in the corporation’s charter to be regarded as valid.

Also, In law:

A situation in which a famous trademark or service mark is used in a context in which the mark’s reputation for quality is tarnished or its distinction is blurred. In this case, trademark infringement exists even though there is no likelihood of customer confusion, which is usually required in cases of trademark infringement. For example, the use of the word Candyland for a pornographic site on the Internet was ruled to dilute the reputation of the Candyland mark for the well-known children’s game, even though the traditional basis for trademark infringement (probable customer confusion) wasn’t an issue.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Dilution. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 05, 2020 https://payrollheaven.com/define/dilution/.
Chicago Manual of Style (CMS):
Dilution. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/dilution/ (accessed: July 05, 2020).
American Psychological Association (APA):
Dilution. PayrollHeaven.com. Retrieved July 05, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/dilution/

Definition Sources

Definitions for Dilution are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 22nd April, 2020 | 1 Views.