The former executive chairman of embattled airline Regional Express has been fined $800,000 and banned from running an Australian company for four years after he admitted to misleading the market and breaching his directors’ duties.
In May, Lim Kim Hai, who was once the airline’s largest shareholder, confessed that he had broken the law with a February 2023 market announcement that said the carrier would make a profit, when it was really on track for a $35 million loss.
Hai also admitted to breaching his continuous disclosure obligations, meaning he failed to give potential investors the accurate and up-to-date information they needed. Rex collapsed in mid-2024, entering administration under EY until it was bought by US company Air T late last year.
Despite Lim’s confession, the NSW Supreme Court later exonerated three of Rex’s other non-executive directors, including former Howard government minister and ex-Nationals MP John Sharp – who served as the airline’s deputy chairman at the time – Lincoln Pan and Siddharth Khotkar.
Lim admitted he was liable for the contraventions during the first week of a civil trial brought by the Australian Securities and Investments Commission and agreed on the penalty he would face.
Although Lim and ASIC agreed on the penalty, Supreme Court judge Ashley Black explained on Tuesday that the court still had to be satisfied the penalty was “within the permissible range”.
Black said that “the relevant contraventions were, as Mr Lim admits, serious” and that “Mr Lim was a senior executive of Rex at the time they occurred”.
After recounting the background to the market statement, which Rex issued despite Lim being shown parlous cashflow reports, Black said the facts of the case could have resulted in a higher penalty.
“I bear in mind the matters noted above, any of which would support a greater rather than a lesser penalty,” Black said.
“However, having regard to the agreement reached between the parties and the principles noted above, I accept that the proposed disqualification period of four years combined with a pecuniary penalty of $800,000 is within an appropriate range.”
Lim was also ordered to pay $150,000 of ASIC’s legal costs.
ASIC chairwoman Sarah Court said the penalty should remind directors that they must comply with their obligations and ensure the market receives an accurate picture of their company’s finances.
“Directors play a critical role in upholding the integrity of our financial system by keeping public markets informed,” she said.
“Continuous disclosure is a core obligation for listed entities and underpins Australia’s corporate governance framework. It is critical that investors have access to accurate and timely information that would impact their investment decisions.”