REX told off for blabbing to media rather than ASX

Airline's deputy chair revealed a $200 million plan to fly between capital cities to a newspaper, instead of the market. ASIC is not happy.

| More on:
trouble with asx share represented by business man pointing finger

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The corporate regulator has slammed airline Regional Express Holdings Ltd (ASX: REX) for "continuous disclosure failures" to shareholders and the ASX.

The Australian Securities and Investments Commission (ASIC) on Wednesday slapped a one-year ban on the company from issuing reduced-content prospectuses to raise money on the ASX.

Regional Express must now produce a full prospectus to ask investors for further cash.

The corporate regulator didn't mince words in explaining the prohibition.

"ASIC's decision was based on REX's failure to disclose to the market that it was considering the feasibility of commencing domestic operations, such as flying to capital cities, in addition to its regional operations," stated the commission.

"This information was first released publicly to a journalist on 11 May 2020."

What did Rex do exactly?

The incident refers to Rex deputy chair John Sharp's interview with the Australian Financial Review, where he revealed a new $200 million plan to start flying between Sydney, Melbourne and Brisbane.

Up until then, Regional Express had flown between regional and rural destinations and never directly competed with the likes of Qantas Airways Limited (ASX: QAN) and Virgin Australia.

After the publication of that article, Regional Express was forced to place a trading halt on its shares. The next day it made an official announcement to the ASX revealing the $200 million initiative.

The Motley Fool has requested comment from Regional Express.

ASIC stated that the use of a reduced-disclosure prospectus was "a privilege" conditional on legal compliance, including meeting market disclosure responsibilities.

Ironically the reprimand failed to dampen investor enthusiasm for Rex shares. 

The Rex share price was up 9.14% at 2.30pm AEDT on Wednesday, in response to the company's receipt of a High Capacity Air Operator's Certificate from the Civil Aviation Safety Authority.

This means the airline is another step closer to competing in the lucrative capital city routes, which it plans to do from 1 March.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tony Yoo owns shares of Qantas Airways Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares finished the trading week on a high this Friday.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Broker looking at the share price.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why ARB, Block, Mayne Pharma, and Paladin Energy shares are charging higher today

These shares are having a strong finish to the week. But why?

Read more »

A woman puts her hands up as she smashes and breaks through a glass ceiling.
Share Gainers

How these 5 ASX 200 stocks are smashing the benchmark this week

These fives ASX 200 stocks have made some very happy shareholders this week. Here’s how.

Read more »

Bored man sitting at his desk with his laptop.
Share Fallers

Why Catalyst Metals, Duratec, Nufarm, and Rio Tinto shares are dropping today

These shares are ending the week in the red. But why?

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Broker Notes

After its strategy day, what does Macquarie think Wesfarmers shares are worth?

Let's see what the broker is saying about this blue chip.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »