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Finance Dictionary and Glossary of Investment Terms
In venture capital, an investor protection provision which specifies that options and convertible securities may be exercised relative to the lowest price at which securities were issued since the issuance of the option or convertible security. The full ratchet guarantee prevents dilution, since the proportionate ownership would stay the same as when the investment was initially made.
An anti-dilution provision that applies the lowest sale price for any shares of common stock sold by a company after the issuing of an option (or convertible security) as being the adjusted option price or conversion ratio for existing shareholders.