ASIC cuts 5 years from litigation funding relief date
The corporate watchdog has confirmed a new date with regards to relief relating to litigation funding schemes, which is five years less than what was originally proposed.
As per an ASIC announcement, ASIC Corporations (Amendment) Instrument 2021/116 (amending instrument) has amended the ASIC Corporations (Litigation Funding Schemes) Instrument 2020/787 (primary instrument) by changing the sunset date of the primary instrument.
The primary instrument will now sunset on 22 August 2025, ASIC confirmed. Originally, the date was set at 1 October 2020 “in accordance with the default sunsetting arrangements for legislative instruments provided for under the Legislation Act 2003”.
“The primary instrument commenced on 22 August 2020 and provided exemptions from certain provisions in Chapters 5C and 7 of the Corporations Act 2001 for litigation funding schemes. The relief was provided to facilitate the implementation of the (then) new regulatory framework for litigation funding schemes,” the statement explained.
Upon revising the matter further, ASIC formed the view that it was “preferable” to amend the term of duration from 10 years to five years.
Its reasons for doing so are as follows:
- Concerns with the original term of the primary instrument raised by the Senate standing committee for the scrutiny of delegated legislation, which assesses all legislative instruments subject to disallowance, disapproval or affirmative resolution by the Senate.
- The overlap between the matters addressed by the primary instrument and the recommendations in the final report of the parliamentary joint committee inquiry into litigation funding and the regulation of the class action industry (December 2020), which the government is yet to respond to.
“ASIC formed the view that, having regard to the above circumstances, it was preferable to amend the term of the primary instrument to five years,” the regulator said.
“ASIC will continue to monitor and if necessary, further modify the primary instrument to ensure that it is operating effectively and consistently with the policy intent of the legislative framework applicable to litigation funding schemes.”