On 17 June 2026, ASX released its response paper and exposure draft on Shareholder approval of dilutive acquisitions and changes in admission status. For S&P/ASX 300 bidders, scrip consideration in a takeover or merger would be capped at 25% before shareholder approval (50%) is required. This is down from a long-standing position under which a listed bidder could issue just under 100% of its capital as scrip without one.
Four proposed changes reflect one clear signal: ASX wants shareholders consulted on transactions that permanently dilute them or permanently change the protections of an ASX listing without unnecessarily impeding legitimate deal-making.
S&P/ASX 300 bidders cannot issue scrip at or above 25% of their shares (as consideration, or to fund cash) in a takeover or merger without shareholder approval (50%). Smaller entities keep the existing settings.
Voluntary delisting by a dual-listed entity with a material Australian shareholder base needs shareholder approval (50%) and the framework moves out of guidance and into the Listing Rules.
Switching from an ASX Listing to an ASX Foreign Exempt Listing now needs shareholder approval (50%), with a narrow carve-out for qualifying NZX-listed entities.
ASX declined to require approval for all significant (including cash-funded) transactions under Listing Rule 11.1.2 but flagged it may revisit if concerns persist.
The reform is the direct product of two transactions that tested the market’s tolerance for dilution without a vote. In its takeover of AZEK, James Hardie issued roughly 35% of its capital as scrip under a standard waiver of Listing Rule 7.1. No bidder shareholder vote was required, even though a primary US listing would have triggered one. The Southern Cross Austereo / Seven West Media merger raised the same question. Both were rules-compliant and both drew sharp criticism from large institutions.
ASX had already responded on transparency, requiring entities to disclose Listing Rule waivers and explain why they were sought. The 17 June 2026 package is the substantive second step. Rather than rely on case-by-case waivers and discretion, ASX has moved the protections into the rules themselves, with objective thresholds designed to be predictable for boards and advisers.
The exposure draft now opens a short window. Submissions close at 5.00pm AEST on 29 July 2026, with the amendments targeted to take effect on 21 October 2026, subject to feedback and final regulatory approvals.
A 35% scrip-funded acquisition that proceeded on a waiver (with no vote for the shareholders being diluted) is the fact pattern the new 25% cap is built to address. The catch turns on index membership: James Hardie was an S&P/ASX 200 constituent when it announced the deal, so a bidder of that scale would now be caught, while the same deal by a smaller bidder outside the S&P/ASX 300 would stay within the exceptions, uncapped. James Hardie has since moved its primary listing to the NYSE and left the S&P/ASX indices. This is itself the kind of offshore shift for which the exit reforms now require shareholder approval.
ASX frames the package as balancing shareholder protection and market integrity against transaction and execution certainty, while keeping ASX internationally competitive as a listing and capital-raising venue. The recurring theme across submissions: give us protection, but make the rules predictable and non-discretionary.
ASX has introduced a new concept, being a “prescribed transaction” at or above a “prescribed threshold” (default 25%). This is measured against the bidder’s fully paid ordinary securities on issue at the announcement date. Here is the detail to understand before structuring your next deal:
Only entities in the S&P/ASX 300 index at announcement. Entities outside the index keep the current exceptions (still subject to the 100% reverse-takeover limit).
The 25% default can be raised to any figure below 100% (or lowered) by the constitution, or by ordinary resolution (50%) as a standing mandate for up to three years (new Listing Rule 7.3B).
Once approved, the bidder has 12 months to issue the securities, providing room for staged deals and those needing court or regulatory steps (consequential change to LR 7.3.4).
Exceptions 6 & 7 now apply to a defined “regulated takeover or merger” (Australian or foreign law) on a jurisdiction-neutral basis.
The exceptions remain unavailable for a reverse takeover (an effective 100% ceiling), preserving protection where control effectively passes to the target.
ASX retains its aggregation power. Related issues forming part of the same or a larger commercial transaction (or a series) are added together.
Consequential amendments flow through Listing Rules 7.6 (Exception 4), 7.9 (Exception 4) and 10.11 (Exception 5), with Guidance Notes 21 and 25 updated. New defined terms (“prescribed transaction”, “prescribed threshold”) are added to Chapter 19.
| Area | Outcome | What it does | Where to look |
|---|---|---|---|
| Scrip in takeovers & mergers | Capped | 25% cap on scrip consideration (and scrip funding cash) for S&P/ASX 300 bidders; standing-mandate for any higher percentage below 100%; jurisdiction-neutral; reverse-takeover 100% limit retained. | LR 7.2 Exc 6 & 7; new LR 7.3B; LR 7.3.4; GN 21, GN 25; Ch 19 definitions |
| Voluntary delisting | Codified | Ordinary resolution to delist where the dual-listed entity was first listed on ASX / has a material Australian base; rule-based no-vote pathway where securities stay tradeable offshore; common information requirements. | New LR 17.11A, 17.11B, 17.11C; LR 17.11; GN 33 |
| Change to Foreign Exempt Listing | Vote added | Ordinary resolution required to move from an ASX Listing to an ASX FEL; narrow exemption for qualifying NZX-listed entities reflecting trans-Tasman regulatory alignment. | New LR 18.10; GN 4 |
| Broader significant transactions | No change | No new mandatory approval for significant (including cash-funded) transactions under LR 11.1.2; a clear majority opposed it. ASX will monitor and may revisit. | LR 11.1.2 (unchanged) |
45 submissions were received by ASX reflecting a market that broadly backed protection, while also warning about execution risk.
Respondents included AustralianSuper, UniSuper, Norges Bank Investment Management, IFM Investors, Airlie, Allan Gray, Dimensional, Maple-Brown Abbott, Platypus, WaveStone, Barrenjoey, the AICD, the Law Council of Australia and Governance Institute.
The tension is visible in the data: a clear majority wanted stronger dilution protection, yet 88% acknowledged it would make life harder for listed bidders. That gap is precisely what the standing-mandate and jurisdiction-neutral features are designed to bridge.
The percentages above span all 45 submissions, including the asset managers who pressed for reform. The Law Council’s Corporations Committee, the AICD and some law firms argued the other way. On the two headline settings ASX went past even what the legal and director community were prepared to accept; on the rest, it gave ground.
| Issue | What submitters sought | Where ASX landed |
|---|---|---|
| The threshold | No reduction at all; if forced, 50%, not 25% | Went further A 25% cap |
| Which bidders | A narrower cohort, the S&P/ASX 100 or 200 | Went further The S&P/ASX 300, and dropped the separate $300m limb |
| An opt-out for a higher cap | A constitutional limit or a standing three-year approval (several pointed to the UK rolling pre-emption model) | Adopted Both routes: the new LR 7.3B three-year mandate and the constitution |
| Foreign-law deals | Keep the waiver pathway for deals under comparable overseas regimes | Recast Codified into the exceptions on a jurisdiction-neutral basis, no waiver needed |
| Significant transactions | No change to LR 11.1.2 | Held Left LR 11.1.2 untouched |
Several respondents argued the market can regulate this itself. Shareholders can requisition a constitutional cap without a rule change. The record is mixed: Orora’s shareholders did exactly that, backing a 25% cap with 99.9% support, while a comparable attempt at Southern Cross Media was rebuffed by other major shareholders. That uneven record is part of why ASX concluded a baseline rule was warranted.
For an S&P/ASX 300 bidder, the practical headroom to issue scrip without shareholder approval falls from almost the entire register to a quarter of it, unless the board has built in more, in advance.
A listed bidder can issue scrip up to (just under) 100% of its capital for a regulated takeover or scheme without a vote. Only a reverse takeover requires approval. Foreign deals proceed via discretionary ASX waivers.
A vote is required at or above 25%, but shareholders can pre-set a higher figure (to just under 100%) in the constitution or by a three-year mandate. One regime applies to Australian and foreign deals. Waivers for foreign takeovers or schemes no longer needed.
The rule text is only half the story. Here is what we think matters most for the people who actually structure and approve transactions.
The standing mandate is the most immediately actionable feature. ASX 300 boards with genuine M&A ambition should consider taking a constitutional amendment or a three-year mandate to a scheduled AGM, pre-approving a higher cap when there is no live, confidential deal to disclose. It converts a deal-time vote (slow, conditional, public) into a structural permission already in the bank.
Scope turns on S&P/ASX 300 membership at announcement, and ASX deliberately dropped the $300m market-cap alternative for certainty. The flipside is a hard edge: a company that drops out of the index at a quarterly rebalance escapes the cap, while one promoted into it inherits it. Be conscious of index status at signing and watch rebalance dates around a contemplated announcement.
Entities outside the index keep up to 100% scrip flexibility, and cash bidders sit entirely outside the cap (Chapter 11 was left alone). In a contested process, an ASX 300 scrip bidder needing a vote carries timing and conditionality risk against private capital, foreign acquirers and smaller listed rivals. Expect that risk to be priced, whether in headline value, deal protections, or a tilt toward cash.
The cap is jurisdiction-neutral and applies to both bids and schemes, so choosing a scheme over a takeover (or a foreign target over a domestic one) no longer sidesteps the vote, and aggregation defeats tranching. What remains available is consideration design: tilting toward cash or debt funding to stay under 25%, accepting that “merger of equals” and transformational scrip deals are the natural targets of the reform.
A bidder-side vote on significant share issuance is the norm on US exchanges (the ~20% rule), and the absence of one was the crux of the James Hardie criticism. This reform narrows that gap while preserving the target-side scheme vote. The convergence is selective, though: on significant (non-dilutive) transactions the UK moved the other way in 2024, scrapping shareholder approval in favour of a disclosure-based regime, this was part of why ASX left Chapter 11 untouched. For inbound acquirers and their advisers, the ASX scrip analysis now looks more familiar, not less.
ASX is explicit that these settings sit alongside directors’ duties. Even within the cap, or under a standing mandate, proxy advisers and large institutions (several of whom submitted) will scrutinise highly dilutive scrip deals. The enduring James Hardie lesson is about misjudging shareholder tolerance, not breaching a rule. Engagement and disclosure still decide outcomes.
For an ASX 300 scrip bidder, a shareholder vote rarely sits alone. From 1 January 2026 the new mandatory merger-clearance regime means most public deals need ACCC clearance before completion, and FIRB scrutiny of sensitive sectors has tightened. Add a bidder-side vote on top, and the timetable lengthens, so you should map the full set of approvals, and the conditionality between them, into the deal plan from the outset. Begin with the end in mind.
The exceptions have been in place since 1996, and as recently as 2017 ASX itself called a sub-100% limit a “fundamental change” for which a convincing case had not yet been made. It has now made that change, over the objection of much of the legal and director community, who favoured 50%. The settings are not yet final either as they remain subject to final regulatory approvals before the targeted 21 October 2026 start, so some movement before commencement cannot be ruled out.
When a listed bidder must seek its own shareholders’ approval before issuing scrip to fund a deal, the threshold varies across the markets ASX competes with.
| Market | When the bidder needs shareholder approval to issue scrip | Against the new ASX cap |
|---|---|---|
| Australia (proposed) | At or above 25% of issued capital for S&P/ASX 300 bidders. | The new baseline. |
| United States | At or above 20% of shares or voting power (NYSE Listed Company Manual 312.03(c); Nasdaq Rule 5635(a)). | Lower trigger, and it catches most large share issues, not only acquisitions. |
| United Kingdom | No vote for significant transactions since 29 July 2024 under the UK Listing Rules; a disclosure-based regime applies instead. | Moves the opposite way; a UK bidder can fund a deal with scrip without a transaction vote. |
| Canada | Above 25% of issued securities on a non-diluted basis (TSX Company Manual 611(c)). | The same 25% threshold. |
In Australia, the United States and Canada the share-issuance vote is a simple majority. Each market treats reverse takeovers separately; the United Kingdom also keeps a shareholder vote to cancel a listing, whereas a US voluntary delisting does not.
The delisting and Foreign Exempt Listing changes are a quieter but real constraint on offshore migration. Where 25% or more of an entity’s ordinary securities are held by Australian-registered holders, an ordinary resolution now gates both a delisting and a switch to FEL status. This is directly relevant to redomiciliation and “top-hat” structures that move a primary listing offshore. The 25% Australian-register figure is itself a new structuring threshold to track, and the NZX carve-out is narrow.
An indicative test of the proposed prescribed-transaction threshold. Enter the bidder’s position and the scrip to be issued; share units cancel out, so use any consistent unit (e.g. millions). Illustrative only; not a substitute for advice on a specific transaction.
At ~35% against a 25% cap, this is a prescribed transaction: the bidder would need an ordinary resolution before issuing, or a higher pre-approved threshold. On these facts pre-reform, a deal of this kind could proceed on a waiver with no vote.
With the exposure-draft consultation closed, ASX is finalising the amendments, subject to final regulatory approvals, for a targeted start on 21 October 2026. The pressing question is transitional: any transaction in your pipeline that could straddle commencement should be tested against the proposed 25% cap now, rather than on announcement. Use the lead time to put constitutional headroom or a three-year standing mandate to the next AGM, pressure-test live structures, and brief your board before the rules take effect. We can help you get deal-ready.
We advise bidders, targets and boards across the full public M&A lifecycle. We can pressure-test your structure against the proposed changes, design and run constitutional or standing-mandate approvals, and brief your board on the governance and disclosure expectations that sit alongside the rules.