Dilution of Equity

Dilution of Equity Decrease in the ownership value of a share as a result of increasing the number of shareholder by converting debentures or any other long – term loan into shares or issuing fresh shares, at par or at a premium, to the public, without a corresponding increase in the assets of company. Dilution lowers the book value and earnings per share and is not beneficial to existing shareholders, as bonus and rights shares can be.

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