On 12 July 2012, the Governor General made Corporations
Amendment Regulation 2012 (No. 6) (Amending Regulation)
under the Corporations Act 2001 (Act) which amended the
Corporations Regulations 2001 (Regulations) to exclude litigation
funding schemes and similar arrangements from the definition of
managed investment schemes (MIS) in the Act.
ASIC by way of registered class orders granted transitional
relief to lawyers and litigation funders involved in legal
proceedings structured as funded class actions. The granting of
this transitional relief was by class order [CO 10/333] which
issued on 5 May 2010 and was extended on five subsequent occasions.
Such relief was necessary whilst the legislative response was
considered and implemented. Public consultations occurred on drafts
of the Amending Regulation.
The effect of the Amending Regulation
As anticipated, the Amending Regulation amends the Corporations
carve out litigation funding schemes from the definition of an
ensure that anyone providing a financial service in relation to
a litigation funding scheme does not need to obtain an Australian
Financial Services Licence (AFSL) from ASIC - the exemption is
conditional upon the person providing the financial service
maintaining for the duration of the scheme, adequate arrangements
for managing any conflict of interest that may arise in relation to
activities undertaken in relation to the scheme and also following
the written procedures set out in the Amending Regulation as
constituting an adequate arrangement for managing conflicts of
exempt AFSL holders and authorised representatives from the
requirement to comply with the requirements of part 7.7 of the
Corporations Act when offering a financial service in relation to a
litigation funding scheme eg a financial services guide or
statement of advice need not be provided to a client before
providing such financial service or personal advice
exempt the litigation funder from anti-hawking provisions in
section 992A of the Act - enabling litigation funders to make
unsolicited invitations to persons to become a member of a class
action or other litigation funding scheme
This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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