The corporate regulator will review whether Retail Food Group breached ASX disclosure rules in the manner in which it announced a potential $160 million recapitalisation.

The troubled franchisor on Monday told the ASX it was exploring a range of options including “debt funding proposals” after the share market operator had asked it to explain an abnormal surge in share price and trading volumes.

But after the market closed on Tuesday, RFG responded to media reports that it was sitting on more detailed information by announcing it had received an indicative non-binding recapitalisation proposal from Hong Kong-backed firm Soliton Capital Partners that would dilute existing shareholdings.

ASIC told AAP on Wednesday it would review the chain of events and whether RFG acted within disclosure rules.

RFG initially told the ASX it was not aware of any price-sensitive information that could have sent its shares to a near two-month high.

But the Sydney Morning Herald and Age newspapers reported that restructurers were dealing exclusively with an unnamed local fund and that competing bidders had been told their proposals were no longer being considered.

RFG, which in February reported a first-half loss of $111 million, subsequently said Soliton had not completed detailed due diligence but had been granted what it called “limited exclusivity”.

It also announced that talks over the sale of one of its non-core assets, which on Monday it listed as a “potential” option, were at an advanced stage.

The possible recapitalisation follows two years of negative headlines for RFG over issues that include selling out-of-date food, ripping off franchisees and constantly changing management.

The company’s shares had been worth more than $7 at the start of 2017 but, following a series of heavy losses, hit a record-low 12.5 cents on June 27 this year.

A week of modest gains followed before they surged 21.4 per cent on Friday and another 29.4 per cent on Monday.

The company suggested the jump could be related to a article featuring comments by executive chairman Peter George on the “improvement” in RFG’s turnaround strategy.

Mr George is the company’s third chief executive in three years following the departure of the long-serving Tony Alford in July 2016.

Andre Nell lasted roughly two years in the job before being replaced by Richard Hinson, who resigned after seven months in December.

RFG chairman Colin Archer also retired in September 2018, with Mr George running the company in an executive chairman role since then.

A parliamentary inquiry this year concluded that RFG management was either “unethical” or “incompetent”.

The inquiry into franchising’s final report said RFG had damaged the reputation of franchising in Australia and should be investigated by the competition regulator, the corporate regulator and the Australian Taxation Office.

The report said RFG acquired 10 franchise brands over seven years after listing on the ASX in June 2006 and that evidence suggested rapid growth came at the expense of existing franchisees.

That meant expecting franchisees to work copious hours as a means of free labour, while charging increased fees for reduced services.

The company previously tried to sell its Crust Pizza, Pizza Capers and Donut King brands to help pay down debt and had announced plans to close 250 domestic stores — up from a previously announced 200 — by the end of the 2019 financial year.

In May, RFG acknowledged extending use-by dates on food products and is also staring down a number of possible class actions.

RFG shares finished 2.27 per cent lower on Tuesday, and were flat at 21.5 cents shortly before Wednesday’s close.