The SEC’s Proposals For The Rescission Of Rule 14a-8 And Other Changes Move Forward

On September 16, 2026, the U.S. Securities and Exchange Commission (the SEC) issued a proposal to rescind Rule 14a-8, which governs the inclusion of shareholder proposals on corporate proxy ballots, and amend Rule 14a-4(c) to provide companies with greater flexibility in obtaining discretionary voting authority. The rescission of Rule 14a-8 would mark a fundamental change in how public companies and their shareholders interact and a transition from federal uniformity to a state-by-state approach to the shareholder proposal framework.

In a companion release, the SEC proposed several amendments to modernize the proxy solicitation process. The public comment period will remain open for 60 days following publication of the proposing releases in the Federal Register.

Rule 14a-8 and the rationale for rescission

Rule 14a-8 provides the mechanism by which eligible shareholders of publicly traded companies can include proposals in the company’s proxy materials. Originally, the rule was intended to promote shareholder participation and to provide shareholders voting by proxy the same opportunity to introduce proposals that they would have if they were attending meetings in person. In recent years, the rule has attracted scrutiny amid the broader debate over shareholder activism seeking to advance environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) objectives.

Consistent with SEC Chairman Paul Atkins’s prior criticisms of the existing shareholder proposal regime, the SEC, as expected, took the position that Rule 14a-8 exceeds the SEC’s statutory authority, arguing that the rule has come to operate not as a procedural mechanism facilitating shareholder rights under state law, but as a substantive federal overlay, permitting the SEC to make substantive determinations as to shareholders’ rights to vote on and present certain matters. The proposal argues that the rule, with its various bases for excluding certain shareholder proposals from the company proxy statement, effectively functions as a federal standard for inclusion that dictates the scope of shareholder voting rights, especially at a time when voting by proxy is the primary means of corporate suffrage. The proposal argues that such allocation of power between shareholders and management should be left to the states.

In addition, the proposal outlines several policy reasons for rescission, including an erosion of the original justifications for the rule and certain unintended consequences. The SEC identified several assumptions that were made when the rule was adopted, including that (1) the costs associated with including shareholder proposals in a company’s proxy materials would be small, (2) shareholder proposals would generally be supported by management or shareholders, (3) the volume of shareholder proposals would be low, and (4) the substantive right of shareholders to present matters for voting would be reasonably clear under state law. According to the SEC, none of these assumptions have been borne out, and technological and regulatory advancements now mitigate concerns regarding the cost of independent proxy solicitation, and online platforms and other modern communication technologies help facilitate shareholder engagement and coordination.

The proposal also highlights certain unintended consequences of the rule—including the use of the rule to gain leverage in negotiations with the company, as management faces litigation risk when determining whether a shareholder proposal may properly be excluded from its proxy materials, and the use of the rule to advance political or personal interests not shared by the company’s shareholders at large; and an inhibition on the development of state law and the establishment of shareholder proposal standards by companies. The SEC believes that if the rule were rescinded, and any implication of preemption thereby removed, states and companies would be more inclined to adopt their own standards.

March toward rescission

The rescission proposal is not surprising, given that Chairman Atkins has previously argued that Rule 14a-8 improperly infringes on state law. This position is also consistent with President Donald Trump’s 2025 executive order, which, among other things, directed the SEC Chairman to consider revising or rescinding all rules and guidance inconsistent with the order, including Rule 14a-8, especially when they implicate consideration of ESG and DEI factors.

The proposal follows a line of deregulatory actions by the SEC’s Division of Corporation Finance in connection with the rule. On November 17, 2025, the Division announced that it would no longer respond to most no-action requests for excluding shareholder proposals under the rule but indicated that it would provide a “no-objection” letter if a company provided an unqualified representation that it had a reasonable basis for such exclusion as part of its required notice under Rule 14a-8(j). On August 14, 2026, the Division went a step further, announcing that it would discontinue responding to no-action requests altogether and that it would also cease providing “no-objection” letters in response to Rule 14a-8(j) notices.

Post-Rule 14a-8 landscape

Rescission of Rule 14a-8 would not eliminate shareholder activism altogether, but it would fundamentally reshape it.

• Return to state law. Without a uniform federal rule, the process for including shareholder proposals in corporate proxy materials would default to state corporate law, (which is largely underdeveloped in that regard) and applicable corporate governing documents. State legislation related to shareholder proposals is rare, with one notable exception being Texas Senate Bill 1057 (previously discussed in our blog post on May 20, 2025), which became effective September 1, 2025, adding Section 21.373 to the Texas Business Organizations Code and allowing Texas corporations to opt in to heightened thresholds for shareholders seeking to submit proposals. Although these changes did not specifically address inclusion in a company’s proxy materials, state authorities are expected to have a greater incentive to provide clarity upon rescission.

• Reduced administrative burden weighed against new uncertainty. Companies would no longer be required to include qualifying shareholder proposals in their proxy materials under Rule 14a-8, which could help reduce costs and distraction. However, the absence of a clear federal framework could create uncertainty and litigation risk as shareholders and shareholder rights groups navigate a patchwork of standards and state-law boundaries.

• A new look for shareholder activism. Rule 14a-8 currently provides shareholders with a path to including proposals in the company’s proxy materials at the company’s expense. Rescission may shift the practice toward floor proposals and separate proxy solicitations funded by shareholder proponents. As a result, influence over corporate behavior may transition from shareholders generally and toward large activist firms that can afford to pay for their own proxy solicitations.

Discretionary voting and amendments to rule 14a-4(c)

Anticipating an increase in independent shareholder solicitations upon the rescission of Rule 14a-8, the SEC also proposed certain amendments to Rule 14a-4 to alleviate the expected pressure on companies to voluntarily include shareholder proposals in their proxy materials and preserve the ability to exercise discretionary voting authority.

A company may receive direct voting authority for a proposal included on its proxy card according to the selections made by shareholders (e.g., “for” or “against” a proposal). A proxy may confer discretionary voting authority if a choice is not specified by the shareholder. A proxy may also confer discretionary voting authority for proposals not included on the company’s proxy card under certain circumstances. Rule 14a-4(c) addresses this latter scenario. Specifically, Rule 14a-4(c)(2) permits a company to exercise discretionary voting authority at an annual meeting for matters for which the company received timely notice; however, a shareholder proponent may also block such authority if it solicits a sufficient percentage of shareholders to carry the proposal and it properly notifies the company that it intends to do so. To prevent such blocking, companies may feel compelled to voluntarily include the shareholder proposals on their proxy cards, despite not being required to do so, undermining the intended effect of rescinding Rule 14a-8.

In order to balance the additional flexibility for companies in exercising discretionary voting authority, the SEC also proposed to provide shareholders with greater control over the voting of their shares by requiring proxy cards to include a check box with an option to opt out from granting such discretionary authority on omitted shareholder proposals.

Proposed proxy solicitation modernization

The second proposal includes a number of modernizing changes to the proxy solicitation process, including: (1) an elimination of the requirement for companies to deliver an annual “glossy” report to security holders; (2) an elimination of the requirement to deliver proxy statements incorporating documents other than annual reports by reference to shareholders at least 20 business days prior to the shareholder meeting; (3) a rescission of Rule 14a-6(g) and the Notice of Exempt Solicitation, which would eliminate the requirement for large shareholders to submit a Notice of Exempt Solicitation if they conduct certain written exempt solicitations, and the ability for shareholder proponents to voluntarily file such notices in order to disseminate their views inexpensively and prominently on EDGAR; (4) a shortening of the minimum broker search period from 20 business days to 5 business days; and (5) a new requirement to include on the cover page of proxy statements contact information for a representative who can respond to questions regarding the filing.

Such changes would result in fewer technical delivery requirements, the closing of one avenue for cheaply publishing shareholder campaign materials on the company’s EDGAR page, and a faster-moving proxy season.

What actions should boards and management teams take now?

This is a moment for a proactive assessment of the shareholder engagement and governance landscape. We recommend the following steps:

• Actively monitor the rulemaking timeline. The proposing releases are subject to a 60-day public comment period following publication in the Federal Register, although implementation could be drawn out due to legal challenges.

• Assess your state-law landscape. Understand the state-level shareholder proposal framework in your state of incorporation. If you are a Delaware company, monitor developments closely, as the Delaware legislature may act quickly.

• Review your governing documents. With proponents likely to shift to floor proposals and independent proxy solicitations, you should be familiar with the advance-notice provisions of your bylaws. Evaluate your governing documents for a post-Rule 14a-8 environment and begin exploring the potential for establishing a more comprehensive shareholder proposal framework in your governing documents—one that balances shareholder engagement with guardrails like ownership thresholds, holding period requirements, and volume limitations.

• Prepare for proxy season changes. Plan to coordinate with your transfer agent, proxy solicitor, and financial printer on any adopted changes, including the shortened broker search period. Plan on revisiting your annual meeting calendar in light of the additional flexibility.

• Strengthen your investor engagement program. Engagement during the “off season” may be more important than ever. Companies that demonstrate responsiveness to shareholder concerns will be better positioned regardless of the regulatory outcome.

The bottom line

A rescission of Rule 14a-8 would reshape the shareholder proposal framework that has applied for decades. The companion proxy solicitation reforms may be less controversial and therefore more likely to be adopted. Regardless of how rulemaking ultimately unfolds, companies that begin preparing now will be best positioned to navigate the transition smoothly.