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Hi brettdale,

Hmmmmm - how to eplain this easily.

Say you are a shareholder in Company X which has a total of 1,000 shares on issue. You, as a shareholder in Company X have 50 shares. Now your 50 shares of the total 1,000 shares means that you have a 5% stake in the company (you own 5% of the company)

But the directors of the company decide that they need more capital to run the company for some reason or another company T wants to invest some money in company X. An agreement is reached between the two companies that Company T will invest so many $$$$s in Company X and be given 200 sghares in return for that investment capital.

So company X now has 1,200 shares in total but you still have only your original 50. So your share of the company has now gone down to about 4.17%. Your shareholding has been diluted down by the company making an arrangement with a third party to increase the total number of shares without you participating in that arrangement.

I think that make sense. Check it out and ask if you are not clear on anything there.