The SEC's Latest Shareholder Proposal (Rule 14a-8) Developments

No more no-action letters and maybe no more Rule 14a-8?

The Securities and Exchange Commission’s Division of Corporate Finance announced last Friday that:

On November 17, 2025, the Division announced that for the 2025–2026 proxy season (October 1, 2025 – September 30, 2026) it would not respond to no-action requests or express any views regarding companies’ intended reliance on any basis for excluding shareholder proposals under Rule 14a-8, except for no-action requests to exclude a proposal under Rule 14a-8(i)(1).

Longtime readers will recall that I covered that announcement in depth last year:

I concluded therein that:

It’s easy to imagine boards spending more time and money deciding whether to exclude a proposal and be less willing to exclude marginal proposals.

My sense is that that proved the case in this year’s proxy statements. As Drew Hutchinson reported Friday:

Friday’s update signals that companies and their investors will have to keep working out proposal disputes among themselves until the agency says otherwise, a process that during the 2026 proxy season involved an unforeseen amount of litigation.

In any case, the Division’s new announcement says that it is getting out of the no-action business entirely:

In order to focus Division resources on the review of Securities Act and Exchange Act filings, including those reviews that are statutorily required, for the protection of investors and facilitation of capital formation, and in light of the extensive body of guidance from the Commission and the staff available to both companies and proponents on Rule 14a-8, the Division has determined to discontinue responding to Rule 14a-8 no-action requests entirely, including those submitted under Rule 14a-8(i)(1), effective immediately, unless and until the Division announces otherwise. …

Companies will continue to be required under Rule 14a-8(j) to submit notices to the Commission containing the information required by the rule when they intend to exclude shareholder proposals from their proxy materials.

Hutchinson reminds us that:

The SEC is also reconsidering a federal rule requiring companies to include eligible investor proposals, which can deal with anything from shareholder rights to environmental and social programs, on their ballots.

Given the burden placed on companies by the Division’s decision to get out of the no-action letter business, the SEC needs to speed that process up. A lot.

If Chairman Atkins wants to know what I think, I refer him (and the interested reader) to my post:

In it, I explained that:

In order of preference, my reform proposals have been: Repeal > Private ordering,

But today I offer a third option: Relocation.

If we must have a shareholder democracy project, let’s move that project from Rule 14a-8 to 14a-4. I speak, of course, of the so-called zero slate proxy contest. …

… eliminating the shareholder proposal rule would not eliminate shareholder proposals. It would simply mean that a proponent would have the obligation to file a proxy statement and comply with the full panoply of proxy rules. To be sure, this would raise the proponent’s costs, meaning that proponents would need deeper pockets than the current de minimis cost system. But so what? A shareholder proponent ought to be willing to put its money where its mouth is.

Lastly, however, for my case for simply repealing Rule 14a-8, see this post: