On 12 July 2012, the Federal Government passed amendments to the
Corporations Regulations 2001 (Cth) to exclude litigation
funding of class actions (Funding Arrangements)
from paragraph (n) of the definition of managed investment scheme
(MIS) in section 9 of the Corporations Act 2001 (Cth)
(Act). This means that litigation funders
(Funders) do not have to comply with the onerous
registration, licensing, conduct and disclosure requirements for an
MIS stipulated by the Act.
The salient features of the amendment include the insertion of
clause 5C.11.01 which sets out the requirements a scheme must
satisfy to be excluded from the definition of an MIS. The
requirements include that the dominant purpose of the scheme is for
each of its members to seek remedies to which they may be legally
entitled (clause 5C.11.01(b)(i)) and that the Funder may provide
funds under a "no win no fee" arrangement (clause
5C.11.01(v)).
