Australia’s corporate watchdog is reportedly reviewing comments from Regional Express Holdings’ deputy chairman, which potentially breached the Corporations Act.
Last week’s call from Labor senator Tony Sheldon for the Australian Securities and Investments Commission (ASIC) to investigate the airline’s conduct have seemingly yielded results, with The Australian Financial Review reporting the regulator is now reviewing Rex’s statements.
It comes after Rex was accused of breaching its continuous disclosure obligations, when deputy chairman John Sharp revealed to the media plans for the airline to expand city routes before announcing them to the Australian Securities Exchange (ASX).
ASIC has not yet responded to Travel Weekly’s contact for confirmation.
However, the AFR reported on Wednesday that ASIC chairman James Shipton had confirmed the regulator was reviewing Rex, saying: “These disclosure obligations are a prerequisite for market integrity and investor confidence.”
According to the outlet, Rex could now face civic penalties of up to $10.5 million – or 10 per cent of its annual turnover – if found to have breached its duties under the Corporations Act.
The act requires listed entities to disclose information not generally available or which a reasonable person would expect to have a material effect on share prices to the market operator, with the ASX applying the same requirement in its listing rules.
Speaking to the AFR, Shipton also noted ASIC’s commitment to upholding disclosure laws and flagged its new specialist team reviewing market disclosures. He has previously said ASIC was projecting a “laser-like” focus on breaches of this kind during the COVID-19 pandemic
“In response to the COVID-19 pandemic, we have assembled a specialist team to review disclosures to the market, particularly as they relate to the impacts of COVID-19 and capital raisings,” he told the AFR.
However, Shipton would not reportedly disclose any specifics regarding the situation surrounding Rex as it remains under review.
Following the airline’s exit from its earlier trading halt, after Sharp revealed its planned domestic route expansion, the company’s shares rose 32 per cent to $1.19. The company’s shares currently sit at $1.06.
Rex then issued a statement to the ASX saying it did not believe information about possible capital city operations would alter the price of its shares.
“Rex has always tried to ensure that any material information is disclosed to the ASX prior to the release to the general public,” it said.
“In this particular instance, Rex believed that information about possible city operations was not sufficiently definitive to constitute material information.
“Rex has made many announcements of contracts worth several hundreds of millions [of dollars] with barely a ripple on the share price. Given how the share price reacted to the news, it is evident that our judgement call was erroneous.
“We wish to reassure ASX that Rex will err on the side of caution in the future.”
Senator Sheldon has welcomed the review, telling the AFR: “I welcome ASIC’s decision to review the comments made by Rex.
Rex must adhere to corporate laws that are designed to protect the public.”