ASIC has flagged its intentions to grant transitional relief to lawyers and litigation funders involved in legal proceedings structured as funded class actions.
The relief, which will apply until 30 June 2010, is from the requirements that would otherwise apply to funded class actions categorising them as 'managed investment schemes'.
ASIC's relief comes on the back of the Full Federal Court's recent decision that defined a funded class action as a 'managed investment scheme' that had the potential to disrupt the conduct of a number of class actions currently underway.
The transitional relief issued from the regulator is designed to avoid any disruption that could adversely impact plaintiffs in those actions, or interfere with the timely and efficient conduct of the subject litigation.
The decision means relief will be granted from requirements included in the Coporations Act 2001 such as having to appoint an Australian financial services licensed public company as 'responsible entity' to operate the scheme; adopt a complying constitution and compliance plan for the scheme; register the scheme with ASIC; and prepare a product disclosure statement for the scheme and providing ongoing disclosure to members of the scheme.
The relief period is expected to allow time for the government and ASIC to consider and consult on how funded class actions should be regulated under the Corporations Act in the future.
Depending on the outcome of that process, existing class actions may need to be restructured to meet the requirements of the Act by the end of the relief period.
Relief will generally be granted, on individual application, to lawyers and litigation funders involved in the conduct of class actions that were commenced before 4 November 2009.
