Extension of relief by ASIC for litigation funders and proof of debt funders

In July 2011, in the light of some court decisions holding litigation funded class actions to be 'managed investment schemes', which would force litigation funders to comply with the requirements for such schemes in the Corporations Act, the Government released for public consultation a draft of proposed regulations to clarify that litigation funding schemes and proof of debt funding schemes are not managed investment schemes.

In order to allow the Government time to facilitate this, ASIC recently announced that it would extend the operation of its interim class order relief (Class Order 10/333) until February 2012, which will enable those funding schemes to be temporarily exempt from the requirements of the Corporations Act (which requirements include holding a financial licence and the attendant obligations, preparing a product disclosure statement, and providing ongoing disclosure.