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Highlights:
ASX to re-evaluate listing rules following concerns raised over James Hardie’s acquisition of AZEK Co.
Superannuation funds and asset managers voiced concerns about lack of shareholder approval requirements.
The review will revisit prior analyses and assess the need for changes to waiver disclosure obligations.
The Australian Securities Exchange (ASX), which oversees listings across various sectors including construction and industrials, plans to revisit its shareholder approval rules following widespread concern stemming from James Hardie Industries' recent acquisition activities.
Context of the Planned Review
Reports indicate that the ASX is preparing a review of its listing and waiver rules after feedback from institutional groups linked to the James Hardie transaction. The development follows meetings between the ASX chief executive and representatives from large superannuation funds that held interests in the Hardie-AZEK deal.
Concerns focused on the process that allowed James Hardie Industries to proceed with its acquisition of AZEK Co without obtaining a shareholder vote. This arrangement raised questions about the circumstances under which companies should be required to seek shareholder approval for major transactions.
Details Behind the ASX’s Decision
According to sources familiar with the matter, the ASX cited an analysis conducted previously to inform its decision. The exchange plans to refresh this study to reflect current market expectations and practices. The upcoming review will explore when and how waivers to listing rules should be disclosed and whether existing protocols adequately safeguard shareholder rights.
Statements from the ASX leadership acknowledged that feedback from Australian institutions showed a strong preference for a system granting shareholders a greater voice in major corporate actions. However, the ASX also emphasized the need to balance shareholder engagement with broader market functionality.
Government Attention and Investor Response
The issue has drawn attention from the federal government, with the Treasurer reportedly discussing the matter with the ASX chairman. Although government officials acknowledged investor concerns regarding the waiver granted to James Hardie, there has been no indication of direct regulatory intervention at this stage.
The transaction, involving James Hardie's acquisition of home-decking provider AZEK Co, proceeded without a shareholder vote despite the issuance of a substantial volume of new stock. Ordinarily, the listing rules require shareholder approval when a significant number of new securities are issued.
Next Steps for the ASX
The ASX indicated that this review marks the first step in evaluating whether reforms are needed to strengthen shareholder rights in merger and acquisition scenarios. Specific focus areas will include transparency around waiver decisions and whether additional conditions should apply before companies can bypass shareholder approval.
The planned review is expected to generate further discussions between the ASX, listed entities, and investment institutions, with the objective of ensuring that governance practices evolve to meet contemporary standards.
