Corporations Regulations 2001
[ CCH Note: Pursuant to the Corporations Amendment Regulations 2001 (No 4) (SR 2001 No 319) effective 11 March 2002, Chapter 7 (Securities) comprising reg 7.1.01 - 7.15.01 and Chapter 8 (The futures industry) comprising reg 8.1.01 - 8.7.03 are replaced by a new Chapter 7 (Financial services and markets) comprising reg 7.1.01 - 7.12.01. As the subject matter of the new Chapter 7 relates to the new financial services reform regime, " inserted " has been used in the history notes for each provision, and all references to the former provisions have been removed.]
For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies as if section 911A of the Act were modified to insert the following subsection after subsection (5B) :
" (5C)
If the regulations prescribe an exemption under paragraph (2)(k) that covers the provision of a service by a person in relation to:
(a) a litigation funding scheme mentioned in regulation 5C.11.01 of the Corporations Regulations 2001 ; or
(b) a litigation funding arrangement mentioned in that regulation;the regulations may require the person to have adequate practices, and follow certain procedures, for managing conflicts of interest in relation to the scheme or arrangement. "
7.6.01AB(2)
For subsection 911A(5C) of the Act, if a person is providing, or has provided, a financial service covered by the exemption mentioned in paragraph 7.6.01(1)(x) or (y) , the person must: (a) maintain, for the duration of the litigation funding scheme or litigation funding arrangement, adequate practices for:
(i) managing any conflict of interest that may arise in relation to activities undertaken by the person, or an agent of the person, in relation to the scheme or arrangement; and
(b) follow the written procedures mentioned in subregulation (4) for the duration of the scheme or arrangement.
(ii) ensuring that a lawyer providing services in relation to the scheme or arrangement, and any immediate family member of such a lawyer, do not have or obtain a direct or indirect material financial interest in the person; and
Note: The exemption mentioned in paragraph 7.6.01(1)(x) relates to a litigation funding scheme mentioned in regulation 5C.11.01 . The exemption mentioned in paragraph 7.6.01(1)(y) relates to a litigation funding arrangement mentioned in that regulation.
7.6.01AB(3)
A person commits an offence if the person contravenes subregulation (2).
Penalty:
7.6.01AB(4)
For subregulation (2) , a person has adequate practices for managing a conflict of interest that may arise if the person can show through documentation that: (a) the person has conducted a review of the person ' s business operations that relate to the scheme or arrangement to identify and assess potential conflicting interests; and (b) the person:
(i) has written procedures for identifying and managing conflicts of interest; and
(c) the written procedures are reviewed at intervals no greater than 12 months; and (d) the written procedures include procedures about the following:
(ii) has implemented the procedures; and
(i) monitoring the person ' s operations to identify potential conflicting interests;
(ii) how to disclose conflicts of interest to general members and prospective general members;
(iii) managing situations in which interests may conflict;
(iv) protecting the interests of general members and prospective general members;
(v) how to deal with situations in which a lawyer acts for both the funder and general members;
(vi) how to deal with a situation in which there is a pre-existing relationship between any of a funder, a lawyer and a general member;
(vii) reviewing the terms of a funding agreement to ensure the terms are consistent with Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001 ;
(e) the terms of the funding agreement are reviewed to ensure the terms are consistent with Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001 ; and (f) the matters mentioned in paragraphs (a) to (e) are implemented, monitored and managed by:
(viii) recruiting prospective general members; and
(i) if the person is an entity other than an individual - the senior management or partners of the person; or
(ii) if the person is an individual that represents an entity - the senior management or partners of the entity.
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