In brief - ASIC has extended the transitional relief granted by class order [CO 10/333]
ASIC has registered class order [CO 12/158] to amend and thereby extend the effective date of class order [CO 10/333] to 30 September 2012. This extension gives more time for passing the proposed Corporations Amendment Regulations.
The need for transitional relief
In our recent article Recent developments in litigation funding in Australia and the UK, we reported on the transitional relief granted by ASIC to lawyers and litigation funders involved in legal proceedings structured as funded class actions.
This relief was to overcome the managed investment scheme (MIS) provisions of the Corporations Act 2001 (Cth) which had been held by the full Federal Court of Australia to apply to such actions.
Granting of transitional relief
This relief from the MIS provisions of the Corporations Act was firstly by means of individual applications from the date of ASIC's announcement on 4 November 2009 of the granting of relief and then by class order [CO 10/333] issued on 5 May 2010.
This enabled the temporary operation of funded representative proceedings and funded proof of debt arrangements without compliance with the MIS requirements of the Corporations Act.
The instrument, which was originally to have effect until 30 September 2010 but was extended on four subsequent occasions, has now been extended for a fifth time by means of ASIC class order [CO 12/158] registered on 27 February 2012. The effective date is now extended to 30 September 2012.
More time to pass Corporations Amendment Regulations
The latest extension to class order [CO 10/333] allows more time for passing of the proposed Corporations Amendment Regulations providing for:
- the carving out of litigation funding schemes from the definition of a managed investment scheme
- ensuring that anyone providing a financial service in relation to a litigation funding scheme did not need to obtain an Australian Financial Services Licence (AFSL) from ASIC - with this exemption conditional on having adequate arrangements for managing conflicts of interest that may arise in relation to the operation of the litigation funding scheme
- exempting AFSL holders and authorised representatives from the requirement to comply with the requirements of part 7.7 of the Corporations Act when they offer a financial service in relation to a litigation funding scheme - thus a financial services guide or statement of advice need not be provided to a client before providing such financial service or personal advice
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