ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38

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Legislation au F2020L00034 In force Legislative Instrument

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ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38

made under subsections 601QA(1), 926A(2), 992B(1) and 1020F(1) of the Corporations Act 2001.
 

Compilation No. 3 

Compilation date: 13/12/2025

Includes amendments: F2025L01575

About this compilation

This compilation

This is a compilation of the ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 that shows the text of the law as amended and in force on 13/12 /2025 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au).

Application, saving and transitional provisions

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

Contents

Part 1—Preliminary

1 Name of legislative instrument

3 Authority

4 Definitions

Part 2—Declaration

5 Definition of managed investment scheme

Part 3—Exemption

6 Licensing

7 Hawking

8 Financial product disclosure

Part 4—Application and transitional

9 Application

10 Transitional

Endnotes

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

 

Part 1—Preliminary

1 Name of legislative instrument

This is the ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38.

3 Authority

This instrument is made under subsections 601QA(1), 926A(2), 992B(1) and 1020F(1) of the Corporations Act 2001.

4 Definitions

In this instrument:

Act means the Corporations Act 2001.

conditional costs agreement means an agreement of the kind defined as a conditional costs agreement in section 181 of Schedule 1 (Legal Profession Uniform Law) to the Legal Profession Uniform Law Application Act 2014 of the State of Victoria as in force on 17 January 2020 whether or not in that State or for the purposes of that Act.

Part 2—Declaration

5 Definition of managed investment scheme

Chapter 5C of the Act applies to all persons as if section 9 of the Act were modified or varied as follows:

(a)  after the definition of condition, insert:

“conditional costs agreement means an agreement of the kind defined as a conditional costs agreement in section 181 of Schedule 1 (Legal Profession Uniform Law) to the Legal Profession Uniform Law Application Act 2014 of the State of Victoria as at 17 January 2020 whether or not in that State or for the purposes of that Act.”;

(b)  in the definition of managed investment scheme, after paragraph (mb) insert:

“(mba) a scheme for participating in and conducting legal proceedings where the members of the scheme:

(i)  have or may have an entitlement to a remedy arising out of the same or similar circumstances; and

(ii)  wholly or substantially fund their legal costs under conditional costs agreements;

(mbb) a scheme for proving claims against a company under Division 6 of Part 5.6 (including the preparation and lodgement of the proofs) where the members of the scheme:

(i)  have or may have claims against the company arising out of the same or similar circumstances; and

(ii)  wholly or substantially fund their legal costs under conditional costs agreements;”.


Part 3—Exemption

6 Licensing

A person does not have to comply with subsection 911A(1) or 911B(1) of the Act for the provision of a financial service in relation to:

 (a)  an interest in a managed investment scheme (a conditional cost litigation scheme) that is a scheme for participating in and conducting legal proceedings, where the members of the scheme:

(i)  have or may have an entitlement to a remedy arising out of the same or similar circumstances; and

(ii)  wholly or substantially fund their legal costs under conditional costs agreements; or

 (b)  an interest in a managed investment scheme (a conditional cost proof of debt scheme) that is a scheme for proving claims against a company under Division 6 of Part 5.6 of the Act (including the preparation and lodgement of the proofs) where the members of the scheme:

(i)  have or may have claims against the company arising out of the same or similar circumstances; and

(ii)  wholly or substantially fund their legal costs under conditional costs agreements; or

 (c) an arrangement (a funding product), or an interest (a funding product) 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:

(i)  an arrangement for participating in and conducting legal proceedings brought by or on behalf of a person where the person’s legal costs are wholly or substantially funded under a conditional cost agreement;

(ii)  an arrangement for proving claims made by a person against a company under Division 6 of Part 5.6 of the Act (including the preparation and lodgement of the proofs) where the person’s legal costs are wholly or substantially funded under a conditional cost agreement.

7 Hawking

 

A person does not have to comply with subsection 992A of the Act in relation to:

 

(a)  an interest in a conditional cost litigation scheme; or

 

(b)  an interest in a conditional cost proof of debt scheme; or

 

(c)  a funding product.

8 Financial product disclosure

A person does not have to comply with Part 7.9 of the Act in relation to:

(a)  an interest in a conditional cost litigation scheme; or

(b)  an interest in a conditional cost proof of debt scheme; or

(c)  a funding product.

Part 4—Application and transitional

9 Application

For the avoidance of doubt, the declaration in section 5 does not have effect for the purposes of section 601MB of the Act in relation to a contract entered into before the commencement of this instrument by a person to subscribe for an interest in:

  1.           a conditional cost litigation scheme; or

(b) a conditional cost proof of debt scheme.

10 Transitional

This instrument has effect until the end of 31 January 2029.


Endnotes  

Endnote 1—About the endnotes

The endnotes provide information about this compilation and the compiled law.

The following endnotes are included in every compilation:

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Abbreviation key—Endnote 2

The abbreviation key sets out abbreviations that may be used in the endnotes.

Legislation history and amendment history—Endnotes 3 and 4

Amending laws are annotated in the legislation history and amendment history.

The legislation history in endnote 3 provides information about each law that has amended (or will amend) the compiled law. The information includes commencement details for amending laws and details of any application, saving or transitional provisions that are not included in this compilation.

The amendment history in endnote 4 provides information about amendments at the provision (generally section or equivalent) level. It also includes information about any provision of the compiled law that has been repealed in accordance with a provision of the law.

Misdescribed amendments

A misdescribed amendment is an amendment that does not accurately describe how an amendment is to be made. If, despite the misdescription, the amendment can be given effect as intended, then the misdescribed amendment can be incorporated through an editorial change made under section 15V of the Legislation Act 2003.

If a misdescribed amendment cannot be given effect as intended, the amendment is not incorporated and “(md not incorp)” is added to the amendment history.

 

Endnote 2—Abbreviation key

ad = added or inserted

orig = original

 

 

am = amended

p = page(s)

 

 

amdt = amendment

para = paragraph(s)/subparagraph(s)

 

 

C[x] = Compilation No. x

/sub‑subparagraph(s)

 

 

ch = Chapter(s)

pres = present

 

 

cl = clause(s)

prev = previous

 

 

cont. = continued

(prev…) = previously

 

 

def = definition(s)

pt = Part(s)

 

 

Dict = Dictionary

r = regulation(s)/Court rule(s)

 

 

disallowed = disallowed by Parliament

reloc = relocated

 

 

div = Division(s)

renum = renumbered

 

 

exp = expires/expired or ceases/ceased to have

rep = repealed

 

 

effect

rs = repealed and substituted

 

 

gaz = gazette

s = section(s)/subsection(s)

 

 

LA = Legislation Act 2003

/rule(s)/subrule(s)/order(s)/suborder(s)

 

 

LIA = Legislative Instruments Act 2003

sch = Schedule(s)

 

 

(md not incorp) = misdescribed amendment

SLI = Select Legislative Instrument

 

 

cannot be given effect

SR = Statutory Rules

 

 

mod = modified/modification

sub ch = Sub‑Chapter(s)

 

 

No. = Number(s)

sub div = Subdivision(s)

 

 

Ord = Ordinance

sub pt = Subpart(s)

 

 

 

underlining = whole or part not

 

 

 

commenced or to be commenced

 

 

 

 

Endnote 3—Legislation history

Name

Registration

Commencement

Application, saving and transitional provisions

ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38

21/1/2020 (see F2020L00034)

22/1/2020

 

ASIC Corporations (Amendment and Repeal) Instrument 2021/799

22/9/2021 (see F2021L01310)

5/10/2021

 

ASIC Corporations and Credit (Amendment and Repeal) Instrument 2022/1032

15/12/2022 (see F2022L01651)

16/12/2022

 

ASIC Corporations and Credit (Amendment) Instrument 2025/809

12/12/2025 (see F2025L01575)

13/12/2025

 

 

 

Endnote 4—Amendment history

Provision affected

How affected

Section 2

rep. s48D LA

Section 5

am. 2022/1032

Section 7

am. 2021/799

Section 10

am. 2022/1032

Section 10

am. 2025/809

 

 

 

Overview

The ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 was enacted to address the gap in regulation of conditional costs agreements within managed investment schemes, specifically those involved in litigation or proving claims against companies. This instrument was made under the authority of the Corporations Act 2001 by the Australian Securities and Investments Commission (ASIC) to ensure that certain activities related to conditional costs schemes are properly regulated. The primary policy objective is to maintain market integrity and protect investors by providing clear guidelines on the regulation of these schemes. The instrument provides exemptions from certain licensing, hawking, and financial product disclosure requirements for entities offering interests in conditional cost litigation schemes, conditional cost proof of debt schemes, and funding products, provided that the legal costs are funded under conditional costs agreements. This legislative instrument remains in effect until 31 January 2029, with amendments made to keep pace with legislative changes and regulatory developments.

Scope and Application

The ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 is a legislative instrument made under the Corporations Act 2001, applying specifically to the regulation of conditional costs agreements within managed investment schemes. This instrument modifies the Corporations Act to include the definition of a "conditional costs agreement" as per the Legal Profession Uniform Law Application Act 2014 of Victoria. It defines a managed investment scheme to include schemes for participating in and conducting legal proceedings or proving claims against a company, where members of the scheme fund their legal costs under conditional costs agreements. The instrument exempts certain activities from licensing and disclosure requirements under the Corporations Act, specifically for interests in conditional cost litigation schemes, conditional cost proof of debt schemes, and funding products, provided they meet the defined criteria. The exemptions do not apply to contracts entered into before the commencement of this instrument. This legislation is in force until 31 January 2029, with amendments made through subsequent legislative instruments, such as the ASIC Corporations (Amendment and Repeal) Instrument 2021/799 and the ASIC Corporations and Credit (Amendment) Instrument 2025/809, detailing changes and transitional provisions.

Key Provisions

The ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 (the Instrument) provides specific provisions regarding conditional costs agreements within managed investment schemes. Section 5 of the Instrument modifies the definition of a managed investment scheme under the Corporations Act 2001 (the Act) to include schemes where participants fund their legal costs under conditional costs agreements. Specifically, it adds two new categories of schemes: conditional cost litigation schemes, which involve participants who may have an entitlement to a remedy from the same circumstances and fund their legal costs under conditional costs agreements, and conditional cost proof of debt schemes, which involve participants who may have claims against a company from the same circumstances and fund their legal costs under conditional costs agreements. The Instrument imposes certain exemptions and obligations on entities and individuals involved in these schemes. Section 6 exempts persons from the need to comply with licensing requirements for providing financial services in relation to interests in conditional cost litigation schemes, conditional cost proof of debt schemes, and funding products. This exemption applies provided that the legal costs are wholly or substantially funded under conditional costs agreements. Section 7 exempts persons from the prohibition on unaccredited hawking of financial products, and Section 8 exempts them from the requirement to provide financial product disclosure documents, both for interests in conditional cost litigation schemes, conditional cost proof of debt schemes, and funding products. Additionally, the Instrument outlines specific obligations and requirements for the entities governed by it. For example, it mandates that the exemptions provided in Sections 6, 7, and 8 do not apply to contracts entered into before the commencement of the Instrument for subscribing to interests in conditional cost litigation schemes or conditional cost proof of debt schemes, as stated in Section 9. Section 10 specifies that the Instrument will be in effect until 31 January 2029. Regarding penalties and consequences, the Instrument itself does not explicitly outline penalties for non-compliance with its provisions. However, non-compliance with the Act, which the Instrument amends, could result in significant penalties. For example, contraventions of the Act can lead to fines, imprisonment, or both, depending on the severity of the breach. Under the Act, civil penalties can include fines of up to $2.1 million for corporations and $420,000 for individuals, and criminal penalties can include imprisonment for up to five years. These penalties underscore the importance of adhering to the requirements set forth by the Instrument and the Act.

Legal classification tags

Area of Law
Corporate Law & Governance
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Licensing & Registration
Reporting & Disclosure Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.