The Supreme Court of New South Wales has found regional airline Rex breached its continuous disclosure obligations over a profit forecast issued on 28 February, 2023.
In the February 2023 forecast, Rex said it was optimistic the group would achieve positive operating profits for the full 2023 financial year, barring any further external shocks.
The Court found that from 14 April, 2023, Rex did not have reasonable grounds to expect the group would deliver those positive operating profits.
Rex disclosed a profit downgrade on 20 June, 2023, forecasting a $35 million group operational loss. The airline entered voluntary administration on 30 July, 2024.
The Australian Securities and Investments Commission (ASIC) was unsuccessful in its case against former non-executive directors The Hon John Sharp AM, Siddharth Khotkar and Lincoln Pan over alleged breaches of their directors’ duties, and its alleged misleading conduct case against Rex itself.
The decision comes six weeks after Rex’s former executive chair, Lim Kim Hai, admitted to all alleged contraventions against him. Lim accepted he should face a pecuniary penalty and disqualification orders for breaching his director duties and for his involvement in Rex’s continuous disclosure contravention.
ASIC chair Sarah Court said continuous disclosure was a core obligation for listed entities and underpinned Australia’s corporate governance framework.
“It is critical that investors have access to accurate and timely information that would impact their investment decisions,” Court said.
The matter will return to court for a hearing on the relief sought against Lim.
Rex in hot water as ASIC claims board knew about poor sales despite positive investor briefing
