Grandfather Clause

AAA

DEFINITION of 'Grandfather Clause'

An exemption that allows persons or entities to continue with an activity they were engaging in before it became illegal through a change in regulation.

INVESTOPEDIA EXPLAINS 'Grandfather Clause'

For example, imagine there's a passing of a new law that states restaurants can serve only food with less than 10 grams of fat per serving. If accompanied by a grandfather clause, the law would affect only new restaurants. All restaurants that began operating prior to the law would therefore be allowed to continue selling their products, regardless of whether their fat content exceeds the 10-gram limit. Because of the change in regulation, however, new restaurants must abide by the new law. Grandfathering is a debatable practice that often hinders some and benefits others.

RELATED TERMS
  1. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible ...
  2. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  3. Prospectus

    A formal legal document, which is required by and filed with ...
  4. Securities Act Of 1933

    A federal piece of legislation enacted as a result of the market ...
  5. Buyout Settlement Clause

    An insurance contract provision that allows the insured to refuse ...
  6. Mandatory Binding Arbitration

    A contract provision that requires the parties to resolve contract ...
RELATED FAQS
  1. I own shares of a company that just received a delisting notice from Nasdaq. Does ...

    Let's start by walking through the reasons for listing requirements and what happens when a company's stock is delisted from ... Read Full Answer >>
  2. Are mortgage-backed securities backed by any guarantees?

    Actually, any mortgage-backed security (MBS) guarantee depends on who issued it. To review, an MBS is a security, created ... Read Full Answer >>
  3. How are corporate poison pills regulated in the United States?

    The Delaware Supreme Court was the first legal authority to declare poison pills a valid initiative. This defense is either ... Read Full Answer >>
  4. How legally binding is a letter of intent?

    A signatory may be bound to a letter of intent depending on how the letter is drafted. In a business-to-business transaction, ... Read Full Answer >>
  5. How does a letter of intent work in the context of mergers and acquisitions?

    A letter of intent, or LOI, is used to set forth the terms of a proposed merger or acquisition. It is usually the first step ... Read Full Answer >>
  6. How is the Chairman of the Securities and Exchange Commission (SEC) chosen?

    The Chairman of the Securities and Exchange Commission (SEC) is appointed personally by the president of the United States. ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    Tales From Wall Street's Crypt

    Wall Street continues to attract fresh hordes of ghoulish people committing the same old crimes.
  2. Personal Finance

    Protect Your Personal Assets

    A family limited partnership (FLP) can go a long way toward securing your family's property.
  3. Budgeting

    Top 7 Social Security Myths: Exposed

    A look at several myths that surround Social Security benefits.
  4. Investing Basics

    Get A Hold On Mishandled Accounts

    Find out what to do if you have a dispute with your broker.
  5. Personal Finance

    The World's Top 10 Law Firms

    Here is a list of world's top ten law firms in terms of revenue.
  6. Entrepreneurship

    Alternatives To Business Bankruptcy

    Bankruptcy isn't the only alternative for a struggling business. It can try negotiating with creditors or liquidating assets outside the U.S courts.
  7. Retirement

    Power Of Attorney Form

    Be sure that any
  8. Retirement

    Power Of Attorney: Do You Need One?

    Having a power of attorney ensures that you select who will act for you when you are unable to handle your affairs. Without one, the courts decide.
  9. Investing News

    How The Patriot Act Works & Why Is It Important

    The USA Patriot Act gave the government more muscle to fight financial crime after the Sept. 11 terrorist attacks. Here's an overview.
  10. Credit & Loans

    Bankruptcy Consequences

    You've done the deed and are out from under your debts – or embarked on a repayment plan. What consequences can you expect and how long will recovery take?

You May Also Like

Hot Definitions
  1. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  2. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  3. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  4. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
  5. Wash Trading

    The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading ...
Trading Center