The NSW Supreme Court has found that Rex Airlines contravened its continuous disclosure obligations and misled the market about its financial position, in a judgment handed down on Tuesday.

The ruling followed action by the Australian Securities and Investments Commission, which sued the regional airline over allegations it engaged in misleading and deceptive conduct and failed to meet its market disclosure obligations.

The court found Rex failed to disclose market-sensitive information about a forecast $35 million profit downgrade in a timely manner. Rex had told the Australian Securities Exchange in February 2023 that the company would deliver positive operating profits for the 2023 financial year, but ASIC argued the airline did not have a reasonable basis for that claim, as it had been incurring operating losses.

The regulator argued Rex knew in February 2023 it would not deliver a profit for the financial year, but did not inform the market until June 2023, constituting a breach of its continuous disclosure obligations.

In his judgment, Justice Ashley Black noted the importance of the continuous disclosure regime and found that as a consequence of Rex’s contravention, investors were left to proceed on a misleading basis.

However, the court did not find that three former Rex directors, John Sharp AM, Lincoln Pan and Siddharth Khotkar, had breached their directors’ duties. ASIC also did not succeed in its separate misleading conduct case against Rex.

Former executive chair Lim Kim Hai had previously admitted to all alleged contraventions against him and accepted he should face a financial penalty and disqualification orders. The matter will return to court at a future date to determine penalties against Mr Lim and declarations against Rex.

ASIC chair Sarah Court said continuous disclosure was a core obligation for listed entities and underpinned Australia’s corporate governance framework. She said it was critical that investors have access to accurate and timely information that would impact their investment decisions.

Rex went into administration in July 2024 with more than $500 million in debt and was sold to United States company Air T in December last year, after the federal government stepped in to prevent the airline being permanently grounded. The Australian government has paid $4.8 million in Rex debts owed to regional councils across the country.

Rex Airlines has been contacted for comment.

This article appeared on Back Country Bulletin on 6 July 2026.