Grandfather Clause

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.

Notes:

For example, imagine there's a passing of a new law that states restaurants can serve only food with less than ten 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 ten-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.

See also: SEC

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Grandfather clause

A provision included in a new rule or regulation that exempts a business that is already conducting business in the area addressed by the regulation from penalty or restriction.