The move follows heightened scrutiny of ASX-listed James Hardie, which sought a waiver for a shareholder vote on its proposed $14 billion acquisition of US-based Azek.
The ASX granted the waiver, allowing the deal to proceed without shareholder approval. In addition to the acquisition, the transaction would see James Hardie shift its primary listing to New York.
Unsurprisingly, in a market update on Sunday, the ASX acknowledged “heightened investor interest” in shareholder approval requirements for mergers and takeovers involving listed companies.
“This issue has been elevated following the application for a waiver to the requirement for a shareholder vote by building products provider James Hardie,” the market operator said.
“Public markets play a critical role in Australia’s economy by helping companies grow and giving investors the opportunity to share in that growth. ASX’s Listing Rules underpin a key part of this ecosystem by providing a fair, orderly and transparent regime for investors and listed entities.
“ASX’s rules and guidance promote a listing environment where both investors and listed companies can have confidence about how we will apply the rules and ASX regularly consults with the market to ensure the Listing Rules remain effective and fit for purpose.”
While noting that the Listing Rules must strike a balance between the interests of listed entities and investors, the ASX acknowledged concerns from local institutional investors that fear current shareholder approval requirements may not give them sufficient influence in key corporate decisions.
“ASX has a strong interest in ensuring the rights and interests of both groups are appropriately represented,” the market operator said.
In response, the ASX committed over the weekend to revisiting its 2017 analysis on shareholder approval thresholds for listed company mergers, with a particular emphasis on reverse takeovers.
According to the market operator, this will serve as the first step in a broader review of the current shareholder approval requirements. As part of the process, the ASX plans to explore scenarios where companies must disclose the receipt of a waiver to the Listing Rules when publicly announcing the matter related to the waiver.
Commenting on the update, ASX managing director and chief executive Helen Lofthouse said that feedback from investors, many of those being shareholders of James Hardie, reveals a dissatisfaction with the lack of voice of shareholders in companies listed on the exchange.
“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,” Lofthouse added.
“We will seek feedback from stakeholders once we have updated the 2017 analysis and this will support a more informed review of shareholder approval requirements.”
On Monday, James Hardie – whose shareholders include AustralianSuper – announced that it would not pursue foreign exempt listing status. The company further stated that it would hold a shareholder vote before making any decision to alter its ASX listing status.
