Legal Definitions - antidestruction clause

An antidestruction clause is a provision in a security that protects a shareholder's conversion rights in the event of a merger. It grants the shareholder the right to convert their securities into the securities that will replace the company's stock when the merger is complete.

For example, let's say Company A merges with Company B. If a shareholder of Company A has an antidestruction clause in their security, they have the right to convert their securities into the securities of the new merged company, instead of losing their investment.

Antidestruction clauses are important for shareholders because they provide a safeguard against losing their investment in the event of a merger or acquisition. It ensures that they have the option to convert their securities into the new company's securities, which may have a different value or structure than the original securities.