James Hardie Industries (ASX:JHX) shareholders urged the Australian federal government to review the Australian Securities Exchange's (ASX:ASX) decision to grant a waiver that prevented James Hardie investors from voting on the proposed merger with US outdoor building products maker Azek, the Australian Financial Review reported Monday.

The ASX granted the waiver, with Azek shareholders still having the opportunity to vote on the AU$14 billion deal.

The AFR quoted WaveStone Capital principal Raaz Bhuyan as saying that the Treasury should order the ASX to scrutinize the deal because it would allow James Hardie to move its primary listing to the New York Stock Exchange, raising capital market health issues.

"Australian shareholders don't have a say in it," Bhuyan said.

After a call with Anne Lloyd, James Hardie's US-based chairwoman, Greencape Capital portfolio manager David Pace said the "terrible" deal would result in "massive" dilution, per the report.

"Given the grave governance issues on show here, we cannot in good faith continue to hold James Hardie, a name we've held for 18 years," Pace said.

James Hardie did not immediately respond to a request for comment by MT Newswires.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)