SEC Division of Corporation Finance Announces Major Changes to Rule 14a-8 Shareholder Proposal Process

The US Securities and Exchange Commission’s Division of Corporation Finance announced it will no longer express views on most no-action requests seeking exclusion of shareholder proposals under Rule 14a-8. The division will continue to consider requests relying on Rule 14a-8(i)(1), which addresses proposals that are improper under state law.

Exchange Act Rule 14a-8 addresses when a public company must include a shareholder’s proposal in its proxy materials for an annual or special meeting. A company generally must include a shareholder proposal unless the proposal is eligible for exclusion on a procedural or substantive basis, as outlined in the rule.

Historically, a company seeking to exclude a shareholder proposal from its proxy materials—absent successfully negotiating with the proponent to withdraw the proposal—would submit a “no-action” request to the US Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance (Corp Fin), asking Corp Fin staff (Staff) to confirm that it would not recommend enforcement action if the company were to exclude the proposal pursuant to one or more of the procedural and/or substantive bases enumerated in Rule 14a-8.[1]  

SEC’S ANNOUNCEMENT: LIMITATION OF NO-ACTION RESPONSES

No Staff Review of No-Action Requests Other Than Under Rule 14a-8(i)(1)

On November 17, 2025, Corp Fin announced that it will not respond to no-action requests or express any views on companies’ intentions to exclude shareholder proposals for the 2026 proxy season (i.e., October 1, 2025 through September 30, 2026), other than under Rule 14a-8(i)(1) (improper subject for shareholder action under state law).[2] In making the announcement, Corp Fin cited (1) Staff resource and timing constraints following the recent government shutdown, (2) the related backlog of other filings needing prompt attention, such as registration statements for offerings, and (3) the existing, extensive body of guidance from Corp Fin emanating from prior no-action letters, which remain publicly available.

Rule 14a-8(j) Notices Still Required; Online Submission Unchanged

Notwithstanding this significant change, a company must still provide notice to the SEC and the proponent(s) of its intent to exclude a proposal from its proxy materials at least 80 calendar days before filing its definitive proxy statement, pursuant to Rule 14a-8(j). This notice may be either informational only or seek a “no objections” response from the Staff. Notices must be submitted to Corp Fin using its online Shareholder Proposal Form.

• Informational-only notice: We expect that these notices, to which companies will not receive a response from the Staff, will be perfunctory and limited to the name of the company, name of the proponent, date that the proposal was received, and the basis upon which the company is relying upon to exclude the proposal. The Staff will not respond to companies submitting this type of notice under Rule 14a-8(j).
• No objections notice: Companies that wish to receive a response from the Staff to the Rule 14a-8(j) notification must include in such notification an unqualified representation that the company has a reasonable basis, based on applicable authority (e.g., judicial decisions, prior no-action letters issued under the rule or Rule 14a-8 itself), to exclude the proposal. While we expect that this type of notice will be more extensive than the “informational only” notice, it need not and should not include the full analysis that would ordinarily be included in a no-action request. In this regard, the statement from Corp Fin explicitly states that this type of notification “. . . should be limited to the information required by the rule as well as an unqualified representation that the company has a reasonable basis to exclude the proposal.” Corp Fin then will respond with a letter indicating that, based solely on the company’s (or counsel’s) representation, it will not object if the company excludes the proposal from its proxy materials. However, Corp Fin will not weigh in on the adequacy of the representation or express a view on the basis or bases the company intends to rely on in excluding the proposal.

Non-Binding Nature of No-Action Precedent

Notably, the statement highlights that Rule 14a-8 no-action requests are not binding and reflect only informal Staff views. As such, a prior Staff response indicating that the Staff was unable to concur with a company’s view that a proposal may be excluded does not mean that companies cannot form a reasonable basis to exclude the same or a similar proposal.

CONTINUED REVIEW UNDER RULE 14A-8(I)(1)

Because of unsettled questions about how state law and Rule 14a-8(i)(1) apply to precatory (non-binding) proposals, the Staff will continue to review and express its views on no-action requests under Rule 14a-8(i)(1) that seek to exclude proposals that are improper under state law. In its statement, Corp Fin explained that this exception is due to recent developments regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals, which are drafted as recommendations to the board and do not require the board to take action even if approved by shareholders.

In a recent speech, SEC Chair Paul Atkins noted statements by Delaware practitioners suggesting that Delaware law does not confer on stockholders an inherent right to vote on precatory proposals.[3] Chair Atkins expressed that if there is no fundamental right under Delaware law for a company’s stockholders to vote on precatory proposals and the company has not created that right through its governing documents, then there may be an argument that a precatory proposal submitted to a Delaware company is excludable under Rule 14a-8(i)(1). In his speech, Chair Atkins said that if a company obtains an opinion of counsel that precatory proposals are not a proper subject for stockholder action under Delaware state law, then he has “high confidence that the SEC staff will honor that position.”

COMMISSIONER CRENSHAW’S RESPONSE

SEC Commissioner Crenshaw issued a sharp rebuke to the statement, calling this change “an act of hostility toward shareholders” and “more of a giveaway to issuers than an exercise in resource allocation.” She argued that by allowing companies to claim they have a reasonable basis for excluding proposals and receive a “no objection” letter from the Staff without the Staff evaluating the merits of the company’s basis, companies will be emboldened to exclude proposals with little oversight. Ultimately, Commissioner Crenshaw believes that this policy will shift more control to issuers and away from proponents, leading to a diminishment in investors’ perspectives.

IMPLICATIONS FOR COMPANIES AND FUTURE PROXY SEASONS

Corp Fin’s new policy drastically reduces the Staff’s role in resolving disputes over the exclusion of shareholder proposals and places more responsibility (and, correspondingly, litigation risk) on companies and their counsel to assess whether they have a defensible basis for excluding proposals. At the same time, this also considerably eases the process through which companies may exclude proposals from their proxy materials.

In recent years, the Staff had signaled support for shareholder proponents’ expanded ability to include proposals in a company’s proxy materials, including the rescission of certain staff legal bulletins that were viewed as “company-friendly” and a proposed rulemaking that would have revised certain substantive bases under the rule that would have made reliance on such bases more difficult.[4] However, throughout the course of 2025, the Corp Fin has retracted its perceived “pro-proponent” stance, including through the rescission of such prior guidance and the formal withdrawal of its proposed rulemaking.[5] In light of these recent actions, it is possible that Corp Fin’s statement may also signal a move extending beyond the current proxy season that is part of a broader reform of Rule 14a-8, with the SEC playing a much smaller role in the shareholder proposal process.

Given this significant change and the potential for even more dramatic developments, it is imperative that public companies continue to ensure robust legal analysis and documentation when excluding proposals, as the lack of Staff concurrence does not insulate them from potential shareholder litigation or SEC enforcement actions in the future, and proponents must continue to receive, and other stakeholders may be interested in, the bases for exclusion identified in the Rule 14a-8(j) compliant notification.

Companies should also monitor further SEC announcements for any changes in the policy or additional guidance, especially as Corp Fin continues to assess the sufficiency of available guidance for exclusion of precatory proposals under Rule 14a-8(i)(1). The Corp Fin’s statement will introduce new dynamics into any discussions between a company and proponents regarding the potential negotiated withdrawal of a proposal, and it is likely that proponents will begin to explore alternative routes to achieving their goals.

As many proponents currently submit precatory proposals to force companies to take a public stance and give their shareholder base a voice on environmental, social, and governance issues, they may continue to pursue these goals through submitting proposals crafted to avoid being precatory, “vote no” campaigns and/or exempt solicitations. In any case, there is likely to be an increase in litigation, with questions regarding the scope of applicable state law or other bases for exclusion being settled in the exclusion of their proposals in the courts.