The Federal Court on Friday gave CSR Limited a go signal to hold a shareholder vote on its $3 billion proposal to split into two companies.

Chief Justice Patrick Kean, together with Justices Ray Finkelstein and Peter Jacobson have turned the tables on the decision made by Justice Margaret Stone last February.

According to Justice Stone, the demerger will affect asbestos compensation since it offends "public policy and commercial morality."

Justice Stone was concerned over the company's ability to meet future payments to victims of asbestos-related diseases.

"I cannot be satisfied that the (asbestos) provisions made are consistent with commercial morality or that the scheme, if given effect, would not involve an unfair or oppressive result," she said.

CSR announced late last year on its new plan to build a new company called Sucrogen. The new company will operate sugar and renewable energy assets, and leave the new company with the building product businesses and its asbestos liabilities.

CSR's decision of a demerger received strong and negative reactions from government officials of New South Wales, the Asbestos Injuries Compensation Fund, and James Hardie, its donor.

The Australian Securities and Investments Commissions did not formally support nor oppose CSR's proposal for a demerger.

CSR is currently in talks with China's Bright Food Group for its Sucrogen with a sum of $1.75 billion.

CSR closed its shares yesterday at $A1.69.