Full Ratchet Anti-Dilution Protection

Full Ratchet Anti-Dilution Protection: the most extreme and rarely used type of anti-dilution protection. It essentially means that if a company sells its shares at a price below that paid by investors in the company’s most recent financing (i.e. in the event of a down round), the investors with full ratchet anti-dilution protection have their conversion ratio adjusted so that when their preferred shares convert into ordinary shares they would receive the same number of ordinary shares as if they had originally purchased them at the new lower price.