Investor scrutiny of recent public M&A deals has intensified pressure on the ASX to review its listing rules and waiver practices, prompting debate over shareholder rights and deal certainty.  On 20 October 2025 ASX responded by issuing a consultation in relation to proposed changes to the listing rules, including (amongst others) a change designed to protect bidder shareholders from dilutive M&A transactions.

Heightened investor scrutiny of recently announced public M&A deals in Australia has intensified calls to reform the ASX listing rules governing these transactions. The growing concern among shareholders – particularly those involved in major Australian mergers, feeling sidelined and disenfranchised – is prompting many boards to consider seeking shareholder approval, even when it is not strictly mandated or when waivers are available under existing regulations. This has also encouraging the ASX to review its application of listing rules and frequently granted waivers in public M&A activity.

Predictive–Robex merger underlines the debate

A recent example is the $2.4 billion merger between TSX-listed Robex and ASX-listed Predictive Discovery. The transaction was structured to leverage standard waivers of ASX listing rules, thereby circumventing a shareholder vote by Predictive Discovery investors (while Robex shareholders retain their voting rights). Predictive Discovery shareholders will relinquish nearly 50% ownership of the combined entity to Robex shareholders, who, as the 'target', must approve the deal. The Predictive board cited the risks associated with completion delays and additional costs as rationale for requesting these waivers, which in turn removed the requirement to seek shareholder approval for the deal.

Longstanding waiver practice faces renewed scrutiny

In Australian public M&A (particularly cross-border M&A), reliance on ASX waivers and Listing Rule exceptions to bypass bidder company shareholder approvals is a well-established practice, often promoted by financial advisors and legal counsel to minimise execution risk and streamline timing. However, this approach has drawn increased scrutiny following heightened shareholder activism in the wake of the $14 billion James Hardie–AZEK merger, in which James Hardie obtained ASX waivers to avoid a shareholder vote. The situation could escalate should shareholders succeed in influencing the outcome at upcoming AGM board elections as a protest vote against the deal (of which they were not permitted to vote on). For many shareholders, enhanced disclosure regarding waiver use has not adequately addressed underlying concerns, but rather simply clarified how such decisions were made.

ASX initially responded to the James Hardie uproar by updating its disclosure requirements regarding granted waivers; nevertheless, recent deals such as those involving Predictive and the Seven West–Southern Cross merger (which similarly precluded Southern Cross shareholder input) have continued to sideline shareholder votes. For many shareholders, enhanced disclosure regarding waiver use has not adequately addressed underlying concerns, but rather simply clarified how such decisions were made.  And this has led ASX to respond again with its 20 October consultation paper.

Despite ongoing debates, both the market's positive response to the Predictive–Robex transaction and the support of major Southern Cross shareholders for the Seven West deal suggest that opposition may relate less to the dilution of shareholder rights and more to concerns over shareholder value, though these issues remain interconnected.

What’s next for boards and advisors

It remains uncertain whether company boards will cease pursuing waivers or relying on exceptions to exempt mergers from shareholder approval conditions. Given the ongoing imperative to mitigate execution risk and maintain competitive standing in bidding processes, most boards are likely to persist with current practices, unless prompted otherwise by significant shareholder action, as could occur if James Hardie shareholders effect board changes at their AGM. Certainly, their advisors will encourage them to stay the course.

Substantive change looks likely to originate from ASX itself. Central to this discussion is Listing Rule 7.1, which restricts companies from issuing more than 15% of share capital without shareholder approval. Historically, companies – including James Hardie, Predictive, and Southern Cross – have relied on exceptions or waivers during regulated M&A to circumvent this provision.

ASX is now proposing that for any company in the S&P/ASX300 the issue of share capital in a takeover scenario relying on the usual waivers or exceptions would now be capped at 25%.  Smaller companies would still have the ability to issue more than 25%.

Potential reforms may bring the ASX into closer alignment with international exchanges such as the TSX or NYSE, which do not provide similar exceptions or waivers for substantial share issuances in takeover situations (albeit typically exceeding the 15% threshold).

The exchange acknowledges in its consultation paper that it must balance its appeal as a business platform – which is currently perceived as increasingly onerous – with investor protection. Imposing mandatory bidder shareholder votes in addition to target shareholder votes could diminish the attractiveness and competitiveness of regulated Australian M&A, adding further regulatory complexity to an environment already impacted by new merger clearance requirements. This may also prompt an increase in break fees sought by targets due to heightened transaction risk.

Key takeaway

Currently, there is "nothing to see here" for bidders and their advisors when structuring M&A transactions. The waivers and the exceptions to bidder shareholder approval requirements are still available and should still be utilised to maximise deal certainty and efficiency.

These rules will be under review as part of an ASX consultation process (and that shareholder groups will be pushing for more shareholder rights) and we argue that any proposed change by ASX should be balanced by the views of business, the advisors and the market operators in ensuring Australia remains a deal friendly jurisdiction.  Furthermore, the obligation of bidder directors to act in the best interests of shareholders.

Deal makers won't necessarily be in favour of the proposed changes (and we expect a number of submissions to that effect) but they seem likely to proceed.  At least it seems that these further deal restrictions won't be applied at the mid to small cap end of the market who are already having to navigate additional regulatory scrutiny and associated costs through enhanced FIRB (and ATO) oversight and the new merger clearance regime.