ASX launches review into shareholder approvals

The Australian Securities Exchange (ASX) has launched a review into listing rules related to shareholder approval requirements, particularly when it comes to mergers and acquisitions.

The ASX said due to "heightened investor interest" around the James Hardie proposed acquisition of US-based Azek, it decided to launch the review into shareholder approval requirements for mergers and takeovers of listed companies undertaking a significant transaction.

The ASX allowed James Hardie to proceed with a $14 billion transaction without an investor vote, which led to backlash from major investors including AustralianSuper, UniSuper, Aware Super and HESTA.

"The Listing Rules need to balance the interests of both listed entities and investors, and ASX has a strong interest in ensuring the rights and interests of both groups are appropriately represented," the ASX said.

"However, ASX acknowledges that Australian institutional investors are concerned that the current settings for shareholder approval requirements may not provide them with enough of a voice."

The review will look to update analysis it undertook in 2017 which looked at shareholder approval levels needed for listed company mergers, with a particular focus on reverse takeovers.

"This will be the first step in conducting a review of shareholder approval requirements as covered by the relevant Listing Rules. At the same time as updating this analysis, ASX will also explore the circumstances in which companies are required to disclose receipt of a waiver to the Listing Rules when they publicly announce the matter to which the waiver relates," the ASX said.

ASX chief executive Helen Lofthouse said pushback from institutional investors spurred the review.

"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," Lofthouse said.

"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."