The glossary to understand and take action

Capital dilution

Dilution refers to the decrease in a shareholder's relative interest when a capital transaction changes the allocation of securities.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

To review a fundraising round, compare the capitalisation table before and after the transaction, as well as the rights attached to the securities. The percentage of capital does not necessarily summarise all voting rights or financial rights.

In your file

What this changes in practice

Dilution is the decrease in the proportion held by a shareholder when the allocation of capital changes, notably when securities are issued. It does not necessarily mean that the economic value of their interest decreases. Both the percentages, valuation, rights attached to the securities and decision-making rules must be examined. The capitalisation table makes the effects visible.

A scenario to help you understand

Educational example

An investor acquires an interest in the capital. The founders compare their percentage before and after the transaction, as well as the voting rights and negotiated commitments.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Préparer une répartition avant et après
  • Distinguer pourcentage et valeur
  • Examiner les droits attachés aux titres

The practical question

Find out more

Comment lire un exemple de dilution ?

Dans un exemple fictif, un associé possède 50 titres sur 100, soit 50 %. Si 100 titres nouveaux sont émis à un investisseur et que l’associé ne souscrit pas, il détient 50 sur 200, soit 25 %. Cet exemple suppose des titres de mêmes droits ; la valeur de sa participation dépend aussi de la valorisation de l’opération.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

Share capitalShare capital is an amount set out in the articles of association based on contributions recognised as capital, then amended in accordance with the applicable procedures.ShareholderA shareholder holds rights in a company by virtue of their participation in the capital or under the rules of the relevant legal form.Approval for the transfer of sharesApproval required for certain transfers of shares to a new shareholder.Public limited company (SA)A public limited company (SA) is a capital company organised around shares and governing bodies defined by its legal framework and articles of association.Business planThe business plan presents the project, its market, its organisation and its financial forecasts.EquityEquity consists of accounting resources including, in particular, capital, reserves and results according to the applicable format.

Put it into practice

Explore further with our guides

Practical guideFinancing a startup in Luxembourg: comparing the resources availablePractical guideStarting a startup in Luxembourg: organising support and the first stepsPractical guideCapital increase: preparing contributions and resolutions

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.