Australian stock exchange operator to reassess M&A rules amid James Hardie backlash

THE Australian stock exchange operator ASX said on Sunday that it had initiated a process for its rules regarding shareholder approvals for mergers and acquisitions.

The ASX’s decision to review its listing process came a day ahead of fibre-cement maker James Hardie saying it would hold a shareholder vote before making any decision to change its ASX listing status.

“Under our current standard ASX Listing, we are subject to…obtain shareholder approval of equity issued to directors…This requirement will continue following completion of the AZEK transaction,” James Hardie said on Monday.

A group of investors recently urged a review of Australia’s listing rules, arguing it’s unfair that companies can issue shares for acquisitions without shareholder approval.

They cited James Hardie’s proposed US$8.75 billion acquisition of AZEK, saying the deal would severely dilute existing shareholders’ interests and alter their rights without a vote.

James Hardie’s plans to shift its primary listing to New York after the deal would mean Australian shareholders’ ability to hold the management accountable will be diminished, the investors had said.

The bourse operator said the outcry surrounding James Hardie’s waiver request had triggered increased investor interest in strengthening shareholder approval requirements for major transactions involving listed companies, thus prompting them to launch a review process.

“We have heard from investors – many of them shareholders of James Hardie – that they want a greater voice for shareholders invested in ASX-listed companies, but we are also mindful that we need to examine this question in a way that ensures we serve the needs of the market as a whole,” ASX managing director and CEO Elen Lofthouse said. REUTERS