Litigation Funding Regulation

The Corporations Amendment (Litigation Funding) Regulations 2020 (Regulations) were published on 23 July 2020. A copy of them and the Explanatory Statement is available here. The Regulations give effect to the Australian Government's announcement on 22 May 2020 that litigation funders would be required to hold an Australian Financial Services Licence (AFSL) and comply with the regulatory regime applicable to managed investment schemes (MIS).

The Regulations are effective from 24 July 2020 and mean that litigation funders will be subject to the AFSL and MIS regulatory regimes for "litigation funding schemes" (see the end of this note for a complete definition). The new regulatory regimes will begin to apply from 22 August 2020, unless the litigation funding scheme was entered into prior to 22 August 2020 (Pre 22 August 2020 Schemes). The Regulations contain transitional provisions that exempt Pre 22 August 2020 Schemes from the AFSL and MIS regulatory regimes.