ASIC suing Rex Airlines over ‘serious governance failures’
Corporate regulator, ASIC, is suing beleaguered regional airline, Rex, alleging that four of its directors are guilty of “deceptive and misleading conduct” regarding profit projections.
The watchdog has alleged that Rex – as well as board members John Sharp, Lim Kim Hai, Lincoln Pan and Sid Khotkar – did not adequately disclose projections that it would suffer a $35 million operating loss for FY23 when it issued an ASX update in February 2023, instead forecasting profits, telling the market the airline was “optimistic the Group will have positive operating profits for the full FY23 barring any further external shocks”.
The regulator claims this projection was made “despite being aware when it issued the February ASX announcement that the company was unlikely to achieve an operating profit”.
The company then delivered a downgrade on June 20, forecasting a $35 million operating loss for the financial year.
Rex entered voluntary administration in July 2024, but continued to operate regional flights, thanks to an $80 government bail out.
ASIC chair Joe Longo said the regulator’s case “will allege serious governance failures at Rex”.
“Rex’s directors had a responsibility to take reasonable steps to ensure the company complied with the law and we will seek to hold them to account,” Longo said.
“We will allege four of Rex’s directors breached their duties because they failed to take steps to ensure the market had accurate information about the company’s financial performance.”
John Sharp told the ABC on Wednesday morning he will fight the ASIC charges.
“I do not believe I have breached any regulations and as such I will defend the matter vigorously,” he said.
Rex Airlines has declined to comment on the matter.
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Nathan Jolly is the Features Editor at Mumbrella. He joined the team in July, 2023.
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topics
ABC
Albanese Government
ASIC
john sharp
Lim Kim Hai
Lincoln Pan
Qantas
Rex
Rex Airlines
Sid Khotkar
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