Dilution means a shareholder's percentage stake in a limited company decreases when new shares are issued, for example through a new share issue or when options are exercised.
Dilution is clearly visible in the company's cap table. Owners can avoid it by subscribing for their part in a rights issue. A directed share issue, on the other hand, always dilutes those who do not take part.
A new share issue is when a limited company issues new shares for payment to increase its capital.
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A cap table is an overview of how ownership in a company is distributed among its shareholders.
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A rights issue is a new share issue in which existing owners have priority to subscribe for new shares.
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A directed share issue is a new share issue offered to selected investors instead of all owners.
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