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ASIC extends relief from regulation for all funded representative actions and funded proof of debt arrangements
12-242MR ASIC extends relief from regulation for all funded representative actions and funded proof of debt arrangements
Friday 28 September 2012
ASIC has extended the interim class order relief granted to lawyers and funders involved in legal proceedings structured as funded representative proceedings and funding claims lodged with liquidators to prove in the winding up of an insolvent company.
Class Order [CO 12/1301] extends the relief in Class Order [CO 10/333] Funded representative proceedings and funded proof of debt arrangements until 13 January 2013.
ASIC first announced class order relief in this space in May 2010 (refer 10-92ADASIC grants interim class order relief from regulation for all funded representative actions and funded proof of debt arrangements).
The relief has been extended to allow time for the commencement of the Corporations Amendment Regulations 2012 (No. 6) (Amending Regulations) which will commence from 13 January 2013. From that date:
a litigation scheme and a proof of debt scheme will be exempt from the definition of a managed investment scheme in s9 of the Corporations Act 2001; and
funders and lawyers providing financial services for litigation schemes and proof of debt schemes will be exempt from the requirements that would otherwise apply under Ch 7 of the Act, including the licensing, conduct and disclosure requirements, but they must have adequate arrangements to manage conflicts of interest. ASIC released Consultation Paper 185 Litigation schemes and proof of debt schemes: Managing conflicts of interest (CP 185) outlining its proposals on how funders and lawyers can satisfy this conflicts management obligation in August 2012.
In the meantime, CO 10/333 has been extended to avoid any interim disruption that could adversely impact plaintiffs, or interfere with the timely and efficient running of litigation.
Class Order [CO 10/333], Funded representative proceedings and funded proof of debt arrangements