Shareholder class actions for alleged breaches of a listed company’s continuous disclosure obligations are an established part of the Australian legal landscape with more than 50 shareholder class actions being commenced since 1999.

The prevalence of shareholder class actions over the past decade has been driven, in part, by increased volatility in equity markets, together with growth in the third party litigation funding market, including entry into the market by a number of recognised foreign funders, and by the rise in institutional participation.

However, there is still some uncertainty in the Australian market as to the viability of such actions, particularly where they are funded. This is due to a lack of judicial guidance on two key areas which have the ability to impact on the commercial justification for pursuing these claims: the approach Courts will take to the issue of causation and the apparent willingness of the Courts to re-write funding agreements.