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A group of investors has called for a reassessment of Australia’s listing regulations, arguing that it is "unfair" for companies to issue large quantities of shares to finance acquisitions without shareholder approval.

In a letter sent to the Australian Stock Exchange (ASX) on Wednesday, the investors raised concerns about James Hardie’s proposed $8.75 billion acquisition of AZEK, which they claim would greatly dilute the interests of current shareholders and "irreversibly alter their rights" without any vote.

The investors, including prominent pension funds such as AustralianSuper and UniSuper, as well as institutional investors Schroder Investment and Fidelity Australia, urged the ASX to require shareholder approval for any share issuance above a certain threshold, as well as for changes to listing conditions.

Some of the investors writing to the ASX are shareholders in both James Hardie and AZEK. They also pointed out that James Hardie’s plan to shift its primary listing to New York would reduce Australian shareholders' ability to hold management accountable.

The proposed deal, which is pending regulatory approval and expected to close in the second half of 2025, involves AZEK shareholders receiving $26.45 in cash and 1.034 James Hardie shares for each AZEK share.

The investors expressed concerns that the shift to a New York listing would permanently alter James Hardie shareholders’ rights, noting significant differences between ASX and NYSE listing rules that could disadvantage them.

They called for the ASX to reconsider how it applies its discretion in such situations and update its guidance and listing rules accordingly. Neither the ASX, James Hardie, nor AZEK immediately responded to requests for comment from Reuters.

Paraphrasing text from "Investing.com"all rights reserved by the original author