The Australian Securities and Investments Commission (ASIC) has moved to create transitional relief for lawyers and litigation funders involved in funded class actions.
The transitional relief will allow action against groups including failed agribusiness manager Great Southern to continue without disruption until at least the middle of next year.
Last month a Federal Court ruling decision found that class action being funded against Brookfield Multiplex fell within the definition of a managed investment scheme (MIS) under the Corporations Act.
The finding put at risk a number of class actions currently in play. If ASIC enforces the Federal Court finding, funded class actions would need to meet the various requirements of an MIS.
This would include appointing an Australian Financial Services Licensee as the responsible entity of the scheme, preparing a Product Disclosure Statement for the scheme and provide ongoing disclosure to scheme members, among other requirements.
ASIC said the relief would apply until June 30, 2010, during which time ASIC and the Government would “consider and consult on how funded class actions should be regulated under the [Corporations] Act in 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,” a statement from ASIC said.
Relief will be granted based on individual applications from lawyers and litigation funders involved in class actions that were commenced before November 4 this year. Class actions commenced after that date will be considered separately.
