ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38

Conditional costs agreement is the foundational concept driving the whole Instrument. It is defined in section 4 by reference to section 181 of Schedule 1 (Legal Profession Uniform Law) to the Legal Profession Uniform Law Application Act 2014 of Victoria, as in force on 17 January 2020. Importantly, the definition applies “whether or not in that State or for the purposes of that Act”. This means the Instrument adopts a static, point‑in‑time definition from a single state’s legislation, and applies it nationally regardless of whether the agreement would be valid or regulated under the law of another state. Section 181 of the Uniform Law defines a conditional costs agreement as an agreement under which legal costs are payable only if a specified outcome is achieved, and may include an uplift fee. The Instrument does not incorporate any subsequent amendments to the Victorian Uniform Law, so any future changes to that definition will not flow into the Instrument until it is formally amended.

Conditional cost litigation scheme is defined in section 6(a) as a managed investment scheme for participating in and conducting legal proceedings where members have or may have an entitlement to a remedy arising out of the same or similar circumstances, and wholly or substantially fund their legal costs under conditional costs agreements. The phrase “same or similar circumstances” is a ground commonality test borrowed from class action jurisprudence. The scheme must involve active funding of legal costs; passive membership or investment without direct cost funding likely falls outside the definition.

Conditional cost proof of debt scheme is defined in section 6(b) similarly but focuses on proving claims against a company under Division 6 of Part 5.6 (external administration). This covers arrangements where a group of creditors band together to prepare and lodge proofs of debt, sharing the legal costs under conditional costs agreements.

Funding product is defined in section 6(c) as an arrangement or interest in an arrangement that is a financial product (other than an interest in a conditional cost litigation scheme or proof of debt scheme) to the extent that the person’s legal costs are wholly or substantially funded under a conditional costs agreement. This catch‑all category covers litigation funding products offered by third‑party funders where the funder itself is not a member of a scheme but provides capital to a litigant. The definition is nested: the funding product must be a financial product under the Act (which depends on whether the arrangement is a managed investment scheme, a security, or a derivative, for example). The Instrument then exempts that funding product from licensing, hawking and disclosure if it meets the criteria, but does not change its underlying classification.

The instrument modifies the Act itself by inserting the definitions of “conditional costs agreement” into section 9 (via paragraph (a) of section 5) and adding paragraphs (mba) and (mbb) to the managed investment scheme definition. Because it is a legislative instrument made under subsection 601QA(1) (which allows ASIC to exempt or modify Chapter 5C provisions), the modification effectively clarifies that these schemes are caught by Chapter 5C, contrary to earlier commercial assumptions. The Instrument then uses the same power to provide the targeted exemptions. No change is made to the definition of “financial product” in section 763A, so each funding product must be tested independently.

The Instrument directly affects three groups. Litigation funders and law firms that structure group proceedings or proof‑of‑debt aggregation using conditional costs agreements are the primary beneficiaries of the carve‑out. They can now operate without an AFSL for the specific activities covered, without the expense and delay of preparing a Product Disclosure Statement, and without being subject to the hawking prohibition. This reduces the cost of launching and marketing funded class actions and insolvency proof‑of‑debt schemes. The exemption from licensing lowers the barrier to entry for smaller funders and law firms that might not meet the financial resources requirements for an AFSL. However, the Instrument does not exempt them from other regulatory obligations such as registration of the scheme as a managed investment scheme, which imposes its own compliance costs and oversight.

Plaintiffs and group members (retail clients) who participate in conditional costs litigation schemes or proof of debt schemes are affected because they will not receive the standard protections that accompany an AFSL licensee (such as the obligation to act in the client’s best interests, the dispute resolution system, and the compensation arrangements). They will not receive a Product Disclosure Statement, so they must rely on the conditional costs agreement and any other contractual documents to understand the costs, uplift fees, and risks. This shifts the information asymmetry onto the contractual relationship and any common law duties. The Instrument does not affect the application of the Australian Consumer Law (including unfair contract terms) to the funding arrangements, but those protections are weaker than the mandatory disclosure regime under Part 7.9.

Insolvency practitioners and administrators involved with proof of debt schemes are also affected. They may be involved in facilitating the aggregation of claims but are not themselves exempted from licensing obligations (unless they fall within the scope of the exemption). The Instrument primarily impacts the funders and lawyers who operate the scheme.

Competing financial product providers may be indirectly affected. Funders that structure litigation funding instruments as managed investment schemes or as debentures (which are financial products) are not exempt from licensing in respect of those products unless they meet the definition of funding product under section 6(c). This creates scope for regulatory arbitrage: funders can choose the legal form that best fits the exemption.

ASIC is affected because it must administer the Instrument, monitor compliance with Chapter 5C requirements that are not exempted, and assess whether the conditions (such as “wholly or substantially funded” and “same or similar circumstances”) are satisfied. The Instrument reduces ASIC’s regulatory burden in relation to AFSL applications for these schemes but may increase its supervisory role regarding scheme registration and potential misconduct.

State legal regulators are affected indirectly because the definition of conditional costs agreement is fixed to the Victorian Uniform Law as at January 2020. Discrepancies between that definition and the law in other states (or subsequent amendments in Victoria) create compliance risks for practitioners operating nationally. A law firm in New South Wales may use a conditional costs agreement that is valid under its own legal profession legislation but does not match the Instrument’s definition, potentially causing the scheme to fall outside the exemption.

The Instrument itself does not create new substantive duties. It modifies existing duties under the Act and provides exemptions from three key obligations. The rights and duties that remain are those under Chapter 5C and general law.

Duty to register the scheme. The operator of a conditional cost litigation scheme or proof of debt scheme must still consider whether the scheme requires registration under section 601ED. Because the Instrument declares the scheme to be a managed investment scheme, the default rule applies: if the scheme has more than 20 members or was promoted by a person holding an AFSL, it must be registered. This duty is not exempted. Registration triggers obligations including: preparation of a constitution (section 601GA), a compliance plan (section 601HA), appointment of a responsible entity (section 601FA), and compliance with the compliance plan (section 601FC). These duties impose significant costs and may deter some smaller schemes from operating unless they qualify for an exemption under section 601ED itself (e.g., wholesale clients only).

Duty to avoid misleading or deceptive conduct. The exemption from product disclosure does not negate the general prohibition against misleading or deceptive conduct in section 1041H of the Act (and section 12DA of the ASIC Act). Funders and lawyers must ensure that any communications to potential participants are not misleading. The absence of a PDS does not relieve them of the duty to provide accurate information about the costs, risks and terms of the scheme.

Rights of participants. Participants in a conditional costs litigation scheme have a contractual right to the funding arrangement. They can enforce the conditional costs agreement according to its terms. Under the Act, as members of a managed investment scheme, they have rights to certain information (e.g., annual reports under section 601K, register of members under section 601LC). The Instrument does not exempt the scheme from these member information rights. However, the exemption from Part 7.9 means that participants do not receive a PDS or a periodic statement under subsection 1017D(1), so they must rely on the scheme’s constitution and any additional contractual disclosures.

Duty to manage conflicts of interest. The responsible entity of a registered managed investment scheme must comply with section 601FC(1)(c), which requires it to act in the best interests of members and to manage conflicts of interest. Even where the scheme is not registered, the operator may still owe fiduciary duties under general law. The Instrument does not alter these duties.

Rights of funders. Funders that provide a funding product (as defined) gain the benefit of the exemptions from licensing, hawking and disclosure. However, they do not gain any immunity from the managed investment scheme definition: their funding product may itself be an interest in a managed investment scheme if it meets the definition. The Instrument only exempts those funding products from the three obligations, not from the classification. Therefore, the funder must still assess whether its product is a managed investment scheme or some other financial product and ensure compliance with any other applicable provisions (e.g., fundraising provisions in Chapter 6D if the product is an offer of securities).

No duty to obtain an AFSL. The operator of a conditional cost litigation scheme or proof of debt scheme does not have to hold an AFSL for providing financial services in relation to interests in that scheme. This means the operator is not subject to the general licensee obligations in Part 7.6, such as the requirement to have adequate resources, to maintain competence, to lodge financial statements, and to have a dispute resolution system. The operator retains the duty to comply with Chapter 5C obligations, but those are less onerous than the full AFSL regime.

Because the Instrument exempts persons from the licensing, hawking and disclosure provisions, the corresponding penalties under the Act for contravening those provisions do not apply provided the exemption conditions are satisfied. For example, a person who provides a financial service without holding an AFSL is ordinarily liable for a civil penalty under section 911A(5) (maximum of 2,000 penalty units for an individual or 10,000 for a body corporate). That penalty does not apply if the person is exempted by section 6 of the Instrument. Similarly, the prohibition on hawking (section 992A, which carries a maximum penalty of 200 penalty units for an individual and 1,000 for a body corporate) does not apply to the exempted interests and funding products.

However, the Instrument does not shield a person from penalties under other provisions of the Act. If a conditional cost litigation scheme is not registered when it ought to be (under section 601ED), the operator may be liable for a civil penalty under subsection 601ED(5) (maximum of 100 penalty units per day the contravention continues). If the scheme’s constitution fails to comply with section 601GA, the responsible entity may face an infringement notice or a court order to rectify. The compliance plan obligations under section 601HA also carry potential penalties. Therefore, the enforcement risk shifts from AFSL‑related provisions to Chapter 5C compliance.

The Instrument itself does not create any offence or civil penalty provision. Enforcement lies with ASIC, which may use its surveillance, investigation and court application powers under the ASIC Act if it detects breaches. One particular enforcement risk arises from the static definition of conditional costs agreement. If a law firm uses a conditional costs agreement that is valid under its own state’s laws but does not match the Victorian definition as at January 2020, the scheme may not satisfy the definition of conditional costs litigation scheme. Consequently, the exemptions may not apply, and the operator could be exposed to penalties for unlicensed conduct, hawking, or failure to disclose. This risk is heightened because the definition refers to a specific point in time and a specific instrument. Legal practitioners who update their costs agreements to comply with subsequent state legislative changes may inadvertently take themselves outside the exemption.

ASIC can also take administrative action, such as issuing a stop order under section 601MB (voidable contracts for interests in unregistered schemes) or section 1020E (stop orders for defective disclosure), but the exemption from disclosure removes the latter for the exempted interests. The sunset date of 31 January 2029 creates enforcement uncertainty: if the Instrument is not extended, the exemptions will lapse, and all conditional cost schemes will need to become compliant with the full licensing, hawking and disclosure requirements immediately. ASIC’s approach during the transition may involve extension of relief or consultation.

The Instrument sits within a broader regulatory framework. It is made under four subsections of the Corporations Act: 601QA(1) (ASIC’s power to exempt or modify Chapter 5C), 926A(2) (exemptions from licensing), 992B(1) (exemptions from hawking), and 1020F(1) (exemptions from disclosure). It does not affect the operation of the Act beyond those specific sections.

Relationship with Chapter 5C. The Instrument modifies the definition of managed investment scheme to include conditional cost schemes, but does not exclude them from any other part of Chapter 5C. Therefore, the full body of managed investment scheme law (sections 601EA to 601QB) applies unless a separate exemption is available. This includes the requirement to have a responsible entity that is a public company (section 601FA), the duty to hold property on trust (section 601FC(2)), and the audit requirements under section 601HG. The Instrument creates an anomaly: the scheme is subject to the constitution and compliance plan requirements, but the operator is not licensed. That is unusual because ordinarily the AFSL regime and the Chapter 5C regime are interlinked (for example, the responsible entity must be the holder of an AFSL authorising it to operate the scheme). The Instrument does not address this; it only exempts from the requirement to comply with subsections 911A(1) and 911B(1). The operator must still hold an AFSL if it provides financial services beyond those specifically exempted, such as advising on the merits of litigation or handling client money unrelated to the scheme.

Relationship with the Legal Profession Uniform Law (LPUL). The definition of conditional costs agreement adopts the LPUL definition as at 17 January 2020. For a costs agreement to be valid under the LPUL, it must comply with the requirements of that law, including transparency about uplift fees, maximum caps, and cooling‑off rights. The Instrument does not incorporate those requirements as conditions of the exemption. However, if a costs agreement fails to comply with the LPUL (e.g., because it does not include a prescribed statement), it may be void or unenforceable, which could mean the legal costs are not funded under a valid conditional costs agreement, thus potentially disqualifying the scheme from the exemption. State legal regulators retain jurisdiction over the conduct of lawyers, including costs disclosure and the reasonableness of fees.

Relationship with the ASIC Act. The Instrument does not modify the ASIC Act. Therefore, prohibitions against misleading or deceptive conduct (section 12DA) and unconscionable conduct (section 12CB) continue to apply. Also, the provision of financial services without a licence (if not exempt) is a contravention of the ASIC Act section 12C(1) (carrying on a financial services business without a licence). The Instrument’s exemption under section 6 of the ASIC Corporations instrument is limited to the Act; it does not directly exempt from the ASIC Act, but because the ASIC Act prohibition on unlicensed conduct is tied to the Act’s licensing provisions, the exemption should be effective there as well, provided the person is acting in relation to an exempt interest.

Interaction with state and territory laws. Litigation funding has attracted state‑level regulation, particularly in Queensland and New South Wales, which have imposed caps on litigation funder returns and required funders to be licensed under certain conditions. The Instrument cannot override state laws. A funder that is exempt from the AFSL requirement may still need a licence under state litigation funding legislation. Similarly, the definition of conditional costs agreement tied to Victorian law may conflict with definitions under other state uniform laws. This creates a patchwork that operators must navigate carefully.

Interaction with the Treasury Laws Amendment (2021 Measures) Act 2021. That Act introduced a new regulatory regime for litigation funders, requiring them to hold an AFSL and to maintain adequate practices for managing conflicts. The Instrument was amended in 2021 and 2022, but it still provides broader exemptions than the general regime. The government response to the Australian Law Reform Commission’s report on class actions (2020) proposed reforms, but the Instrument remains in force. The reforms have been partly enacted but the Instrument continues to provide relief where the conditions are met.

The Instrument was originally registered on 21 January 2020 and commenced on 22 January 2020. Since then, it has been amended three times, as recorded in endnote 3.

Amendment 1: ASIC Corporations (Amendment and Repeal) Instrument 2021/799 (registered 22 September 2021, commenced 5 October 2021). This amendment affected section 7 (hawking exemption). The exact change is not detailed in the source, but the amendment history shows section 7 was modified. Given the surrounding context, it likely refined the scope of the hawking exemption, perhaps to clarify that it applied to funding products or to align with amendments to the Act’s hawking provisions that took effect around that time. The 2021 instrument also made other amendments across multiple ASIC instruments, so the change to section 7 was part of a broader clean‑up.

Amendment 2: ASIC Corporations and Credit (Amendment and Repeal) Instrument 2022/1032 (registered 15 December 2022, commenced 16 December 2022). This amendment affected section 5 (the declaration that modifies the definition of managed investment scheme) and section 10 (transitional provision). The amendment to section 5 likely refined the drafting of the new paragraphs (mba) and (mbb), possibly to address unintended over‑capture or to clarify the scope. The amendment to section 10 extended the sunset date (or adjusted transitional arrangements). The original instrument may have had a shorter sunset; this amendment extended it to 31 January 2029 as currently in force. The 2022 instrument also made consequential changes to other instruments.

Amendment 3: ASIC Corporations and Credit (Amendment) Instrument 2025/809 (registered 12 December 2025, commenced 13 December 2025). This amendment affected section 10 only. It extended the sunset further to the current end date of 31 January 2029. (The previous expiry may have been earlier, or the 2022 extension was for a fixed period, and the 2025 amendment pushed it out again.) The instrument remains in force until that date, and any further extension will require another amending instrument.

The amendment history underscores that the Instrument is temporary and subject to periodic review. Each extension suggests that the market continues to rely on the relief and that ASIC has not yet considered it appropriate to let the exemptions lapse. The 2025 amendment occurred very recently (December 2025), indicating that the exemptions are considered necessary at least until early 2029.

The Instrument itself has not been the subject of any reported litigation, and the source does not mention any case names. However, the context of its making is significant. The Instrument was registered in January 2020, shortly after a period of intense judicial and regulatory scrutiny of litigation funding and managed investment schemes. Several Federal Court decisions had raised questions about whether certain litigation funding arrangements constituted managed investment schemes under the Act, creating regulatory uncertainty. The Instrument was ASIC’s response: it used its modification and exemption powers to clarify that such schemes are managed investment schemes (thereby resolving the classification debate) but then provided relief from the most burdensome regulatory obligations. In effect, the Instrument sought to preserve the litigation funding market while ensuring ASIC retained oversight through Chapter 5C registration.

The Instrument’s validity has not been challenged in court. The discretionary powers under which it was made (subsections 601QA(1), 926A(2), 992B(1), 1020F(1)) are broad and have been upheld in other contexts. The static definition of conditional costs agreement tied to a specific Victorian statute as at 2020 might be open to challenge as an unauthorised delegation or as exceeding the scope of the power, but no such challenge has occurred. The Instrument is framed as a modification of the Act itself, which arguably falls within power. The fact that it has been amended multiple times without judicial comment suggests it is accepted as valid.

The Instrument has also influenced subsequent legislative reforms. The government’s response to the Australian Law Reform Commission’s Inquiry into Class Actions (2018) included recommendations to impose AFSL requirements on litigation funders. The Treasury Laws Amendment (2021 Measures) Act introduced a registration regime for litigation funders, but the Instrument continues to provide an alternative path for funding arrangements that meet the conditional costs agreement test. This creates a parallel regime: funders can either comply with the general AFSL regime or structure their arrangements to fit within the Instrument’s exemptions and Chapter 5C registration.

The sunset clause (section 10) means that after 31 January 2029, the Instrument will cease to operate. If no replacement or extension is made, the exemptions will lapse, and all conditional cost litigation schemes and funding products will need full AFSL coverage and disclosure compliance. The transitional impact could be significant, and litigation might arise regarding the application of the law to existing schemes that were set up under the Instrument. ASIC will likely consult with industry on whether to extend or replace the Instrument.

Static definition of conditional costs agreement. The definition is locked to the Victorian Legal Profession Uniform Law as it stood on 17 January 2020. Any changes to that law after that date (e.g., amendments to the maximum uplift fee, new requirements for costs agreements) are not incorporated. If a law firm updates its conditional costs agreement to comply with current legal requirements in its jurisdiction, it may inadvertently fall outside the Instrument’s definition. For example, if the uplift fee cap is lowered from 25 per cent to 20 per cent in a later state regulation, and the firm’s agreement uses a 22 per cent uplift, it may still be permissible under current law but might not match the 2020 definition (which allowed up to 25 per cent). The static definition creates a moving target for compliance.

Ambiguity of “wholly or substantially funded.” The Instrument requires that legal costs be wholly or substantially funded under conditional costs agreements. The term “substantially” is not defined. In a litigation scheme, some members might fund a portion of costs from other sources (e.g., out‑of‑pocket disbursements, pro bono arrangements). If a member’s costs are not substantially funded by the conditional costs agreement, that member may not be within the scheme, potentially affecting the classification of the entire scheme. The risk is especially acute in mixed‑funding arrangements where a third‑party funder contributes part of the costs and the law firm acts on a conditional basis for the rest. The operator must assess on a member‑by‑member basis whether the condition is satisfied.

Registration requirement not exempted. Many operators may assume that because they are exempt from licensing, they are free from all managed investment scheme obligations. However, section 5 declares the scheme to be a managed investment scheme, and section 6 only exempts from licensing, hawking and disclosure. The scheme must still be registered under section 601ED if it has more than 20 members or is promoted by a person holding an AFSL. Registration is costly and involves lodging a constitution and compliance plan with ASIC. Failure to register can expose the operator to civil penalties and voidable contracts under section 601MB. This gotcha is especially dangerous for small schemes that may not expect to be treated as managed investment schemes.

Funding product classification risk. Section 6(c) defines a funding product as “an arrangement, or an interest in an arrangement, of either of the following kind, to the extent that the arrangement or interest is a financial product other than an interest in a conditional cost litigation scheme or conditional cost proof of debt scheme”. This means the funding product must first be a financial product under the Act’s general definition (section 763A). Litigation funding arrangements are notoriously difficult to classify: they may be managed investment schemes, derivatives, securities, or none of the above. If the funding product is not a financial product, the exemption is irrelevant; if it is a financial product but does not meet the criteria (e.g., because the costs are not wholly or substantially under a conditional costs agreement), the exemption may not apply, and the provider may need an AFSL.

Hawking exemption limited. Section 7 exempts from subsection 992A (the anti‑hawking provision). However, the exemption does not apply to any other restrictions on marketing or contacting potential members. State laws on unsolicited communications, the Spam Act, the Do Not Call Register Act, and the general law of undue influence still apply. Funders who aggressively market conditional cost schemes still face legal risks.

Sunset date. The Instrument expires on 31 January 2029. Any schemes established before that date will need to be wound up, restructured, or brought within the general regulatory framework after expiry, unless an extension is granted. This creates uncertainty for long‑running litigation that may span many years. The operator should include provisions in the scheme documents addressing the possibility that the exemption may lapse during the life of the scheme.

Geographic limitation of definition. The definition of conditional costs agreement is tied to Victorian law, but the scheme may operate in a state where the Legal Profession Uniform Law does not apply (e.g., Western Australia or Queensland, which have separate regimes). A costs agreement entered into under the Western Australian legal profession legislation may not be an “agreement of the kind defined in section 181 of Schedule 1 … as in force on 17 January 2020”. The operator must ensure that the agreement matches the Victorian definition, even if it was not made under Victorian law. This may require careful drafting to mirror the specific terms required by the Victorian Uniform Law.

Operators, law firms and funders seeking to rely on the exemptions should take the following steps.

1. Verify the conditional costs agreement. Ensure that every agreement under which members fund their costs meets the definition in section 181 of Schedule 1 to the Victorian Legal Profession Uniform Law Application Act 2014 as in force on 17 January 2020. This includes checking for the required outcome condition, permissible uplift fee cap (maximum 25 per cent of base costs), and any other elements that the Victorian Uniform Law required at that date. If the agreement deviates from that definition (e.g., uses a higher uplift fee, includes a different contingency structure), the scheme may not qualify. It is prudent to obtain a legal opinion confirming that the agreement is of the same kind as defined.

2. Assess the “wholly or substantially” condition. Review the funding arrangements for each member or prospective member. If any member covers a significant portion of legal costs from other sources (insurance, own funds, pro bono), consider whether the conditional costs agreement still funds the costs substantially. There is no safe harbour. Operators should document the basis for concluding that the condition is satisfied, perhaps by having each member confirm the proportion of costs funded by the conditional costs agreement.

3. Evaluate registration obligations. Determine whether the scheme must be registered as a managed investment scheme under section 601ED. The Instrument does not exempt from registration. If the scheme has more than 20 members (which is typical for a funded class action) and is not promoted by an AFSL holder, registration is likely required. If registration is required, prepare a constitution, a compliance plan, and appoint a responsible entity (which must be a public company) before offering interests. If registration is not required (e.g., because the scheme has fewer than 20 members and no promotion by an AFSL holder), ensure that the exemption under section 601ED(1) continues to apply.

4. Review other Chapter 5C obligations. Even if registration is not required, the scheme may still be subject to some Chapter 5C provisions. For example, section 601FC (duties of responsible entity) applies only to registered schemes, but if the scheme is not registered, the operator must rely on general law fiduciary duties. If the scheme is registered, comply with ongoing reporting and audit requirements.

5. Structure the funding product carefully. If providing a funding product separate from the litigation scheme (e.g., a third‑party funder lending to a plaintiff), assess whether that funding product is a financial product under section 763A. If it is, ensure that the arrangement meets the definition in section 6(c): the legal costs must be wholly or substantially funded under a conditional costs agreement (i.e., the funder must structure the arrangement so that the funder’s capital is used to pay legal costs that are also the subject of a conditional costs agreement with the lawyer). The funding product exemption is layered and requires both the funding contract and the legal costs agreement to satisfy the definition.

6. Comply with hawking and disclosure obligations to the extent not exempted. Even if the Instrument exempts from section 992A and Part 7.9, consider other disclosure obligations: general law duties of disclosure, the prohibition on misleading or deceptive conduct (section 1041H), and any regulatory requirements imposed by state authorities. Provide clear, written terms to participants summarising the costs, risks, and the conditional nature of the arrangement. This reduces the risk of a claim for misrepresentation.

7. Maintain records. Document the basis for each exemption claimed. Keep copies of all conditional costs agreements, evidence that the Victorian Uniform Law definition is satisfied, records of member counts, and any legal advice obtained. In the event of an ASIC review, the operator will need to demonstrate that the conditions were met.

8. Monitor the sunset. The Instrument expires on 31 January 2029. For schemes that are likely to extend beyond that date, include provisions in the scheme documents that address what happens if the Instrument lapses. Options include: winding up the scheme before expiry, transitioning to a fully licensed structure, or seeking an individual exemption from ASIC. The operator should also monitor any announcements about extensions or replacement instruments.

9. Consider state law compliance. Check whether the scheme operates in a state that imposes additional licensing or registration requirements on litigation funders (e.g., New South Wales or Queensland). The Instrument does not override state law. Obtain separate licences if required.

10. Engage specialist legal advisers. The interaction between the Instrument, Chapter 5C, state laws and the general law is complex. The static definition, the sunset date, and the ambiguity of “substantially funded” make this a high‑risk area. Do not assume that the Instrument provides blanket relief without careful structural analysis.