A “managed investment scheme” can be defined as a scheme where people (we expect these to be primarily Class Action Members) contribute money or money’s worth to acquire rights to benefits produced by the scheme. Any contributions made are pooled or used in a common enterprise (litigation, funded by external litigation funders) to produce financial benefits for the members of the scheme but the members do not have control over the day-to-day operation of the scheme… The definition of managed investment scheme is set out in s 9 of the Corporations Act and is subject to specific exclusions.
Therefore, to be a managed investment scheme, each of the following elements must exist:
- it must be a “scheme”
- it must involve a contribution of money or money’s worth to acquire rights to benefits
- the contributions are to be pooled or used in a common enterprise to produce benefits for the scheme members and
- the members do not have day-to-day control over the scheme.
It is the practice of the courts to consider each element of the definition separately, and require that all elements be present for the arrangement to be considered a managed investment scheme.
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