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ASIC is looking to appeal the NSW Supreme Court’s decision that three former Rex directors did not contravene their duties.
The court ruled in June that ASIC had failed to prove its case against John Sharp, Siddharth Khotkar, and Lincoln Pan over a market update in February 2023 saying Rex was “optimistic” about a full-year profit, though former executive director Lim Kim Hai was fined and disqualified.
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“ASIC commenced proceedings against Rex and the three directors, as well as former chief executive officer and executive chairman Lim Kim Hai, in December 2024,” the regulator said.
“On 30 June 2026, the Court found that Rex breached its continuous disclosure obligations in relation to the forecast from 14 April 2023. However, the Court did not find that Mr Sharp, Mr Khotkar and Mr Pan breached their directors’ duties, or that Rex engaged in misleading conduct.
“ASIC is appealing the Court’s decision regarding the non-executive directors because it is concerned that there were errors in the primary judge’s findings. ASIC is not appealing the Court’s decision in relation to Rex. The leave to appeal will be determined by the Court on a date to be decided.”
According to ASIC, Rex had seen operating losses in the year to date before issuing that statement and had not prepared a financial forecast for FY23 beforehand. The airline later forecasted a $35 million loss for that financial year and ultimately posted a loss of $31.7 million.
The regulator also alleged that Lim, as well as Sharp, Pan and Khotkar, breached their duties as directors: Lim by drafting and approving the statement and then failing to take steps to make sure Rex met continuous disclosure obligations, and the other three by failing to ensure Rex updated the market in line with those obligations before its downgrade in June.
According to Justice Ashley Black in his ruling, he was “not persuaded that a review of [weekly passenger reports], alone or with the other documents provided to Messrs Khotkar and Pan, would have allowed them to identify adverse trends in Rex’s business”.
Justice Black said he was also not convinced that Sharp “knew at relevant dates that Rex no longer had reasonable grounds to forecast positive operating profits for FY23”.
Only Lim, who in May admitted to misleading investors over Rex’s financial performance in 2023 and agreed to accept penalties, has faced punishment, with an $800,000 fine and a disqualification from managing corporations for four years.
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