The Australian Securities & Investments Commission (ASIC) has placed restrictions on Regional Express (Rex) for failing to disclose its plans to fly domestic routes on the ASX.
The corporate regulator has restricted Regional Express (Rex) from issuing a reduced-content prospectus and using exemptions for reduced disclosure in fundraising documents until 14 December 2021.
ASIC’s decision means the airline will not be able to rely on reduced-disclosure rules and instead must issue a full prospectus in order to raise funds from investors.
The corporate regulator’s decision was based on Rex’s failure to disclose to the market that it was considering the feasibility of commencing domestic operations, such as flying to capital cities, in addition to its regional operations.
This information was first released publicly in an article on The Australian Financial Review by journalist Tony Boyd on 11 May 2020, prompting an investigation by ASIC.
“ASIC considers the ability to use a reduced-disclosure prospectus a privilege that is dependent on compliance with other aspects of the law, including that companies meet their ongoing disclosure obligations,” the regulator said in a statement.
“Where a company fails to comply with its disclosure obligations in a full, accurate and timely manner, ASIC will intervene to ensure that investors are protected.”
ASIC said its investigation into Rex’s conduct is ongoing, and that the airline has the right to appeal to the Administrative Appeals Tribunal for a review of the decision.
Rex said in a statement that it maintains a different view from ASIC and is considering its position in relation to the corporate regulator’s decision.
The airline also confirmed that ASIC’s restrictions will not impede the $150 million funding deal it has lined up with Asian investment firm PAG to launch its domestic services in March 2021.
“Rex does not anticipate any other fundraisings in 2021 that would be affected by the restrictions,” it said.
“All regulatory approvals from CASA for the operation of domestic jet operations, and from FIRB in relation to the transaction, have been obtained.
“Detailed documentation seeking shareholder approval has been prepared, and ASIC has completed its review of that documentation.
“Rex intends to dispatch the documentation to shareholders as soon as ASX completes its review, with a shareholder meeting then scheduled for mid-January.”