After Regional Express chose to publicly spruik its plan to compete with major carriers on capital city routes, the company could face millions in fines.
On 12 May, Rex deputy chairman John Sharp announced to The Australian Financial Review that the company was seeking $200 million to fund the move, without giving prior notice to market regulators or shareholders. This prompted the ASX to pause trading for breaking listing rules.
ALP senator Tony Sheldon called on the Australian Securities and Investments Commission (ASIC) to investigate the announcement, alleging possible breaches of the Corporations Act.
“Rex’s plans to expand into markets in direct competition with Qantas and Virgin, after having received a disproportionate share of government financial support, are inappropriate and exploitative,” Senator Sheldon said.
“Their failure to inform the ASX of these plans per the ASX listing rules flies in the face of Australian corporate standards.”
Under stringent corporate disclosure laws introduced last year, penalties for breach of continuous disclosure obligations can add up to $10.5 million or 10 per cent of annual turnover, whichever is greater.
According to The Australian, ASIC is currently “assessing Sheldon’s request”.
However, Rex did respond to the trading freeze, issuing a statement on 20 May saying that it did not consider the information to be “material”, as required under the act.
“Rex has made many announcements of contracts worth several hundreds of millions with barely a ripple on the share price,” said representatives of the airline.