Offer your thoughts or opinion on the input financial query or topic using your financial background.

Why is stock dilution legal?
Here's another way that I look at it:  Say you and me were 50-50 partners in a small business. Suppose we wanted to expand our business but that needed money. Someone (let's call him Warren) has the money we need & hence in return for the money we offer Warren an equal stake in the business.  i.e. All three of us own 33% stake now. For both you and me our stake reduced from  50% that it was before Warren's entry to only 33% now.  While that reduction in our share may seem at first sight a bad deal for us, we both agreed to give Warren his share consciously not out of altruism but because it made business sense to helps us expand.  Ergo, what matters is not just your share of the pie but the size of the pie itself! And hence dilution of stake can make sense under certain circumstances.  Two small points: (a) This doesn't  in any way show the dilution must make sense. Only that it can sometimes make sense (b) Of course, in the case of a large corporation they do not need your personal approval for the dilution. But hey, neither do they ask you when they buy a new plant or start a new product.