When James Hardie announced it was acquiring US-based building products manufacturer The AZEK Company in March 2025, it immediately raised governance red flags for shareholders.

Alongside concerns about dilution, capital discipline, board oversight and accountability, the company’s reliance on an ASX Listing Rule waiver meant the deal did not need shareholder approval, despite the impact on existing investors.

The absence of a shareholder vote became a focal point for investor criticism. Major institutional investors, including Australian superannuation funds, argued that the transaction would significantly dilute existing holdings and irreversibly alter shareholder rights.

Market reaction to the announcement was strongly negative, and over the course of 2025, James Hardie’s share price fell ~30%. At the company’s AGM in October, shareholders voted to remove chair Anne Lloyd and two other directors and voted down the remuneration report and proposals relating to executive equity and director fees.

ACSI engaged with James Hardie throughout FY26 in response to all these issues, focussing on board accountability, board composition, shareholder rights, and remuneration alignment. We emphasised the importance of appointing strong, independent directors, including Australian-based directors, to restore investor confidence.

The board acknowledged shareholder dissatisfaction and indicated it was focussing on improving engagement, reviewing remuneration practices,  and rebuilding board composition.

The transaction also prompted significant regulatory scrutiny. Following investor engagement, including a joint open letter supported by ACSI members, the ASX consulted on reforms to strengthen shareholder approval requirements for major transactions. In June, the ASX proposed changes to the Listing Rules including requiring shareholder approval for a change of admission category to ASX Foreign Exempt Listing, voluntary delisting by a dual listed entity and sharebased consideration of more than 25% for a takeovers/ merger. The changes proposed are generally consistent with ACSI’s advocacy and our view is that these are good steps in the right direction.

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Next steps

Company engagement

• ACSI will maintain active engagement with companies on board effectiveness,  executive remuneration, and the board’s oversight of strategy.

Public policy advocacy

• Ongoing engagement with the ASX in relation to its Corporate Governance Principles and Recommendations, and its proposed changes  to Listing Rules.
• Ongoing engagement with ASIC, in particular through its Corporate Governance  Consultative Panel.