The ASX is considering significant reforms that could impact how large listed companies execute major acquisitions.
On 20 October 2025, ASX released a consultation paper seeking feedback on potential reforms to the ASX Listing Rules to expand shareholder approval requirements for certain equity funded transactions. Feedback is also being sought about listing status changes and delistings by dual-listed companies.
This consultation follows growing investor unease about highly dilutive share issues used by ASX listed companies to fund takeovers and acquisitions. The flashpoint came earlier this year when James Hardie Industries plc issued shares equal to 35% of its issued share capital to fund its US$8.75 billion acquisition of The Azek Company Inc. without shareholder approval being required under the current Listing Rules, triggering vocal disapproval from some James Hardie shareholders.
The consultation explores the following key areas where shareholder approval could be introduced or expanded:
- Share issues to fund a regulated takeover or merger.
- Significant transactions.
- Changes in listing status and voluntary delistings by dual-listed companies.
If reforms are implemented, affected listed companies will need to plan their M&A strategies and timelines with potential shareholder approval requirements firmly in mind.
Submissions close on 15 December 2025, with any draft rule changes expected to be released by ASX in the second quarter of 2026.
Key Areas for Consultation
1. Share issues to fund a regulated takeover or merger
One of the key areas that ASX is seeking consultation on is the operation of exceptions 6 and 7 in Listing Rule 7.2, which allows a listed company to issue shares as consideration (or to fund cash consideration) for a regulated takeover or merger without shareholder approval – unless the deal constitutes a reverse takeover.
A regulated takeover or merger for this purpose means a takeover bid or scheme of arrangement that is regulated by the Corporations Act 2001 (Cth). However, ASX’s policy is to extend this exception (by grant of waivers, as it did for James Hardie) to similar types of takeovers or mergers regulated under certain overseas regulatory regimes, including the US, UK, Canada and New Zealand. This means that companies could potentially issue up to nearly 100% of their existing shares as consideration under such transactions without a shareholder vote.
ASX is consulting on whether to tighten this significantly, suggesting that larger companies – specifically, those in the S&P/ASX 300 or with a market capitalisation above $300 million – may be limited to issuing no more than 25% of its issued capital without shareholder approval. The existing regime would continue to apply to smaller companies. ASX’s internal analysis indicates that such a change would have affected 19 transactions over the past 5 years.
While ASX considers that this change would enhance transparency and align Australia more closely with peer markets such as the TSX, HKEx and SGX, it acknowledges the trade-offs – higher execution risk and costs, and potential disadvantages for listed companies compared to unlisted acquirers in competitive bid situations.
2. Significant transactions
Some stakeholders have urged ASX to consider an alternative – a requirement for shareholder approval for any significant acquisition, even if it does not involve the issue of shares.
Listing Rule 11.1 currently gives ASX a discretion to require shareholder approval where a transaction results in a significant change to a company’s nature or scale of activities, but there is no mandatory requirement to obtain shareholder approval for a significant transaction. ASX exercises this discretion primarily to regulate backdoor listings, generally indicated by the transaction resulting in a doubling of certain financial metrics (such as assets, equity interests, revenue, profit and issued securities).
ASX is cautious about this suggestion. Expanding the rules to require blanket approval for all significant acquisitions could, in ASX’s view, substantially increase regulatory burden and complexity without necessarily addressing the issues that have been raised by investors about shareholder approval rights.
Nevertheless, ASX is open to feedback and may revisit this in 2026 if stakeholder support for change is strong.
3. Changes in listing status and voluntary delistings by dual-listed companies
Currently, a dual-listed entity can change from a standard ASX Listing to an ASX Foreign Exempt Listing with ASX consent. No shareholder vote is required.
Companies listed as an ASX Foreign Exempt Listing are only required to comply with a small number of ASX’s rules and are primarily be governed by the rules of its overseas home exchange. ASX has received representations that such a listing status change can as a result, significantly impact shareholder voting and other rights, and so should require the approval of those shareholders.
Similarly, ASX is considering whether dual-listed entities should be required to obtain shareholder approval before voluntarily delisting from ASX, even where it remains listed on a foreign exchange.
Currently, delisting requires only ASX’s consent, unless ASX expressly requires shareholder approval as a condition of its consent. ASX will generally not impose such a condition if the company continues to maintain its foreign listing.
ASX’s preliminary view is that requiring shareholder approval in such circumstances would be appropriate, given its material impact on shareholder rights, including voting and governance rights.
What This Means for Boards and Executives
ASX’s consultation represents a measured evolution in shareholder oversight in Australia’s public markets, reflecting heightened investor expectations for transparency and participation in significant corporate decisions.
This kind of investor expectation is already visible in the market and Boards cannot ignore it. For example, at Orora Limited’s 2025 AGM, shareholders voted 99.9% in favour of a constitutional amendment requiring shareholder approval for any share placement by Orora representing more than 25% of the company’s issued capital over a 12-month period.
If ASX proceeds with these reforms, Boards and transaction teams of affected listed companies will need to plan their M&A strategies – including transaction structuring and cost, completion timing and risk, shareholder communications, and management of target expectations – with shareholder approval requirements firmly in mind.
Companies and other stakeholders wishing to make submissions on the consultation should make sure they do so by 5pm on 15 December 2025.