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21-105MR REX pays $66,000 penalty for alleged continuous disclosure breach
Regional Express Holdings Limited (REX) has paid a penalty of $66,000 after ASIC issued an infringement notice alleging it had not complied with its continuous disclosure obligations.
ASIC found there are reasonable grounds to believe that REX was in breach of its continuous disclosure obligations from 11 May 2020 to 12 May 2020 by failing to inform the Australian Securities Exchange (ASX) that it was considering the feasibility of commencing domestic operations in addition to its regional operations.
REX scheduled an interview with the Australian Financial Review (AFR) and prior to the interview, considered what could be discussed with the AFR about the proposal to expand into domestic operations. The interview took place on 11 May 2020, during which details of REX’s proposal were discussed.
Following the release of the article on 12 May 2020, ASX contacted REX about the article and REX was placed in a trading halt. Later that day, REX disclosed to ASX that it was considering the feasibility of commencing domestic operations.
Listed entities are required to immediately disclose material information in certain circumstances. This includes when that information loses confidentiality, for example when a journalist becomes aware of it. Continuous disclosure of information protects the integrity of the market by ensuring investors are provided with equal and timely access to information about an entity.
On 16 December 2020, ASIC restricted REX from issuing a reduced-content prospectus and using exemptions for reduced disclosure in fundraising documents until 14 December 2021 (20-326MR).
Details of the infringement notice will be published in the ASIC Gazette.
Section 674(2) of the Corporations Act and ASX Listing Rule 3.1 detail listed companies’ continuous disclosure obligations.
The Corporations Act provides that compliance with infringement notices is not an admission of guilt or liability.
REX is not, by reason of its compliance with the notice, regarded as having contravened section 674(2) of the Corporations Act.