Litigation funders seek MIS exemption
Litigation funding groups, including IMF Australia, are seeking exemptions from the corporate regulator about the need to register group actions as managed investment schemes (MISs).
IMF said it had joined other litigation funders and plaintiffs' lawyers in seeking exemptions from the Australian Securities and Investments Commission (ASIC) regarding the requirement to register multiparty litigation under the managed investment scheme regime.
The board of IMF wants the exemption so it can continue with its various multiparty litigation actions currently taking place. The group has such action looming against agribusiness manager Great Southern.
If ASIC does require litigation funders to register multiparty action under the managed investment scheme regime, IMF would be able to do so under the terms of its Australian Financial Services Licence.
Brendan Ivers from McMahon Clarke Legal said the “registration of an MIS brings with it increased levels of complexity and compliance costs”.
“This may cause a rethink for litigation funders' arrangements and may see a litigation funder only focus on 'sophisticated' or 'wholesale' class action participants, so as to avoid the need to register the MIS,” Ivers said.
The uncertainty regarding the registration of group action as MISs has arisen as a result of a Federal Court ruling regarding a class action against Brookfield Multiplex.
A Federal Court judge recently found that a funded class action did not fit the definition of an MIS. But in a decision handed down on October 20, the full court of the Federal Court overturned that decision, Ivers said.
Ivers said the full court’s decision suggested that various funded class actions currently before the courts should have been registered as MISs.
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