NSW Supreme Court: Lim Kim Hai Rex Misleading Profit Forecast Ban for 4 Years

• Former Rex chairman Lim Kim Hai has been banned for four years from managing corporations by the NSW Supreme Court.
• Lim was ordered to pay an $800,000 penalty and $150,000 in costs to ASIC for breaches of director duties and continuous disclosure.
• He admitted to lacking reasonable grounds for a February 2023 profit forecast by Regional Express Holdings Ltd (Rex).
• The court found Lim breached sections 180 and 674A(3) of the Corporations Act 2001 (Cth).
• This case highlights severe personal consequences for executives failing to ensure reasonable grounds for public statements or promptly correct misleading information.

This outcome underscores the critical importance of continuous disclosure obligations for listed entities and the severe personal consequences, including management bans and substantial financial penalties, for executives who fail to ensure reasonable grounds for public statements or promptly correct misleading information.

The New South Wales Supreme Court has imposed a four-year ban on Lim Kim Hai, the former chief executive and executive chairman of Regional Express Holdings Ltd (Rex), which was delisted from the ASX in September 2025 after entering voluntary administration in July 2024, from managing corporations. This significant ruling, detailed in *In the matter of Regional Express Holdings Ltd (No 2) [2026] NSWSC 1290* and released on October 20, 2026, also mandates Lim to pay an $800,000 penalty, alongside an additional $150,000 to the Australian Securities and Investments Commission (ASIC) for its legal costs. These orders were the result of an agreement between Lim and ASIC, following Lim's admission to the regulator's allegations against him.

The case stems from a February 28, 2023, announcement by Rex to the ASX, which expressed optimism for positive operating profits for the full FY23, contingent on no further external shocks. Lim was instrumental in both drafting and authorizing this statement. However, the company did not correct this forecast until June 20, 2023, when it subsequently projected an operational loss of $35 million. This correction led to a 12 percent decline in Rex's share price the following day.

Lim admitted that he either knew, or should have known, that Rex lacked reasonable grounds for its initial optimistic forecast. This was supported by internal figures he received just five days before the announcement, which indicated a year-to-date group loss before tax exceeding $23 million. Further evidence included an email from Lim to colleagues on April 26, 2023, after reviewing more loss figures, where he discussed the cash flow for Rex's regional operations and suggested, "we may need to announce to the ASX so can we try to make the operational profits positive."

The NSW Supreme Court issued two key declarations regarding Lim Kim Hai's conduct. Firstly, it found that Lim breached his duty of care and diligence under section 180 of the Corporations Act 2001 (Cth). This breach involved his failure to take reasonable steps to ensure that Rex possessed reasonable grounds for its profit forecast, to correct or withdraw the misleading statement, and to disclose that the group, in fact, had no reasonable basis to forecast an operating profit.

Secondly, the court declared that Lim was involved in Rex's continuous disclosure breach, thereby contravening section 674A(3) of the Corporations Act. Lim's admissions in this case extended further back than the court's findings in a separate judgment released on June 30, 2026, which addressed ASIC's claims against Rex and three non-executive directors. The court clarified that there was no logical inconsistency between the two rulings. It noted that the earlier allegations against Rex and the non-executive directors were deemed 'not established,' rather than 'never occurred.' Given that Lim had not provided evidence during that prior hearing, he was considered uniquely positioned to assess the facts relevant to his own admissions.

The court acknowledged the serious nature of the contraventions and Lim's senior executive position. Despite this, it accepted that the agreed-upon penalty and director ban fell within an appropriate range. The joint submissions from the parties, which the court largely endorsed, highlighted that Lim's settlement occurred after the second day of the liability hearing, which effectively reduced the complexity of the case and ASIC's trial expenses. However, the court also noted the absence of any evidence presented regarding Lim's contrition or remorse.

This outcome underscores the critical importance of continuous disclosure obligations for listed entities and the severe personal consequences, including management bans and substantial financial penalties, for executives who fail to ensure reasonable grounds for public statements or promptly correct misleading information. ASIC Chair Sarah Court emphasized that continuous disclosure is a fundamental obligation for all listed entities, reinforcing the regulator's commitment to upholding market integrity. This ruling serves as a stark reminder for lawyers and compliance officers advising listed entities to reinforce the critical importance of continuous disclosure obligations and directors' duties concerning financial forecasts.

Lawyers and compliance officers advising listed entities must reinforce the critical importance of continuous disclosure obligations and directors' duties concerning financial forecasts. This case highlights the severe personal consequences, including management bans and significant penalties, for executives who fail to ensure reasonable grounds for public statements or promptly correct misleading information, even if settled with the regulator.

Source: Original reporting via legal industry news.