ASIC seeks leave to appeal NSW Supreme Court decision against former Rex non-executive directors
AI Analysis
ASIC is seeking leave to appeal the NSW Supreme Court’s dismissal of its directors’ duties case against former Rex non-executive directors John Sharp, Siddharth Khotkar and Lincoln Pan. The appeal does not challenge the finding that Rex breached its continuous disclosure obligations from 14 April 2023, but may clarify when non-executive directors have sufficient knowledge of adverse financial information to incur personal liability under section 180 of the Corporations Act 2001 (Cth).
Key dates
- 2023-02-28
- Rex issued the profit forecast at the centre of the proceedings.
- 2023-04-14
- The NSW Supreme Court found that Rex’s continuous disclosure breach commenced because it failed to disclose that it no longer had reasonable grounds for the forecast.
- 2024-12-01
- ASIC commenced proceedings against Rex, the three non-executive directors, and former executive chairman and chief executive Lim Kim Hai; the source specifies December 2024 but not an exact day.
- 2026-06-30
- The NSW Supreme Court found that Rex breached its continuous disclosure obligations but dismissed ASIC’s case against the three non-executive directors and did not establish misleading conduct by Rex.
- 2026-08-20
- ASIC filed a Notice of Intention to Appeal the dismissal of part of its case, according to the related court-update material.
- 2026-10-20
- Lim Kim Hai was disqualified from managing corporations for four years and ordered to pay an $800,000 pecuniary penalty after admitting involvement in Rex’s continuous disclosure breaches and breaches of directors’ duties.
- 2026-10-23
- ASIC announced that it is seeking leave to appeal the findings concerning the three former non-executive directors.
Suggested considerations
- Firms should consider reviewing controls for monitoring earnings forecasts against current management information, operational trends and board materials, including clear escalation triggers when a forecast may no longer have reasonable grounds.
- Boards and non-executive directors may wish to ensure that material adverse trends, forecast variances and management warnings are clearly documented, discussed and escalated through formal board and disclosure committees.
- Compliance teams may wish to assess whether directors receive sufficiently clear and timely information to identify potential continuous disclosure issues, rather than relying only on aggregated financial reports or informal updates.
- Listed entities should consider documenting the basis for continuing, correcting or withdrawing earnings guidance and the decision-making process for ASX disclosure under the Corporations Act 2001 (Cth) and applicable ASX Listing Rules.
- Firms should monitor the appeal process and any appellate guidance on the relationship between corporate continuous disclosure liability under section 674A and individual directors’ duties under section 180.
- Boards may wish to review director induction and continuing education concerning continuous disclosure, reasonable grounds for forecasts, escalation responsibilities and the evidentiary importance of board records.
What changed
No new binding obligation or threshold has been introduced by this publication. ASIC is challenging the primary judge’s findings that the evidence did not establish that the three non-executive directors knew Rex no longer had reasonable grounds for its 28 February 2023 positive operating-profit forecast, or that they therefore breached their duties under section 180 of the Corporations Act 2001 (Cth). Independent commentary characterises the judgment as distinguishing information sufficient to create concern from information proving the actual knowledge required for personal liability, while also indicating that the directors’ conduct could have constituted serious contraventions if the requisite knowledge had been established. The existing finding against Rex under section 674A concernin
Compliance impact
The immediate impact is limited because the announcement concerns an application for leave to appeal and creates no new compliance requirement; the leave application’s hearing date has not been set. The enforcement action nevertheless signals continued ASIC focus on governance around earnings guidance and may produce important precedent on when information available to a board becomes sufficient t
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original ASIC source before acting. Full disclaimer.
What the ASIC said
ASIC seeks leave to appeal NSW Supreme Court decision against former Rex non-executive directors
Published by ASIC . Read the full notice at the source for the authoritative text.