The Supreme Court of New South Wales has found that Regional Express Holdings Limited (Rex) breached its continuous disclosure obligations over a 28 February 2023 profit forecast.
In the February 2023 forecast, Rex told the market it was ‘optimistic the Group will have positive operating profits for the full FY23 barring any further external shocks.’ However, the Court found that Rex did not have reasonable grounds from 14 April 2023 to expect that the Rex Group would have those positive operating profits.
Rex later disclosed a profit downgrade on 20 June 2023, forecasting a $35 million Group operational loss. The company entered voluntary administration on 30 July 2024.
Today’s decision comes six weeks after Rex’s former executive chair, Lim Kim Hai admitted to all alleged contraventions against him and accepted he should face a pecuniary penalty and disqualification orders for his director duties breaches and involvement in Rex’s continuous disclosure contravention.
ASIC Chair Sarah Court said, ‘Continuous disclosure is a core obligation for listed entities and underpins Australia’s corporate governance framework. It is critical that investors have access to accurate and timely information that would impact their investment decisions.’
ASIC was unsuccessful in its case against the former non-executive directors The Hon John Sharp AM, Siddharth Khotkar and Lincoln Pan for allegedly contravening their directors’ duties, and its alleged misleading conduct case against Rex.
The matter will return to Court for a hearing on the relief against Mr Lim.
