In an effort to reduce federal oversight of shareholder proposals and provide greater deference to state law over certain corporate governance and shareholder rights, the Securities and Exchange Commission (SEC) announced on September 16, 2026, that it proposes to rescind and eliminate Rule 14a-8 of the Securities Exchange Act of 1934 (Exchange Act), the long-standing rule that establishes the framework for including shareholder proposals in a public company’s proxy statement. This comes on the heels of the SEC’s announcement that it would not respond to no-action requests for excluding shareholder proposals under Rule 14a-8, as explained in our prior client alert. The SEC is also proposing to amend Rule 14a-4(c) to address discretionary voting authority on shareholder proposals when a proposal is not included in a company’s proxy statement and proposing to modernize certain proxy solicitation rules in light of technological advances and increased compliance burdens.
Rescission of Shareholder Proposal Rule
The proposed rescission of Rule 14a-8 would eliminate the SEC’s role in regulating shareholder proposals to be included in the company’s proxy statement, which the SEC now views as exceeding its statutory authority under Section 14(a) and as fundamentally a matter of state corporate law. The elimination of Rule 14a-8 would mean public companies would have to refer to applicable state law or, if permitted, their governing documents, to determine whether shareholder proposals should be included in the company’s proxy materials. In addition to addressing concerns about the SEC’s statutory authority, the proposed recission of Rule 14a-8 reflects the SEC’s belief that many of the original policy justifications underlying Rule 14a-8, such as a historically low volume of shareholder proposals, relatively low cost to include shareholder proposals in company proxy materials, the expectation of significant shareholder and management support of shareholder proposals, and the existence of reasonably clear state law guidance on shareholder voting rights, are no longer compelling. According to the SEC, the rescission of Rule 14a-8 would also eliminate certain unintended consequences associated with the rule, namely, undue influence on interactions between companies and shareholders, reliance on the SEC’s judgment on application of state law to shareholder proposals, and hindering state law development and private ordering of standards governing shareholder proposals and related corporate governance matters.
Amendments to Rule 14a-4(c): Discretionary Voting Authority on Shareholder Proposals
Rule 14a-4(c) currently restricts a company’s ability to exercise discretionary voting authority on shareholder proposals submitted outside of the Rule 14a-8 process, which has created pressure on companies to include shareholder proposals on their proxy cards in instances where neither the federal proxy rules nor applicable state law requires their inclusion. The amendments to Rule 14a-4(c), if adopted, would allow companies to exercise discretionary voting authority with respect to timely shareholder proposals submitted outside the Rule 14a-8 process, regardless of whether a shareholder delivers its own proxy materials, if the company includes:
-
a brief description in its proxy statement of the shareholder proposal and the manner in which the company intends to exercise its discretionary authority,
-
a cross-reference in the company’s proxy card to such disclosure in its proxy statement, and
-
a check box on the company proxy card allowing a shareholder to withhold the authority of the company to exercise discretionary authority.
The proposed amendments to Rule 14a-4(c) would be particularly significant if Rule 14a-8 is rescinded because the amendments would provide companies with a mechanism to exercise discretionary voting authority on omitted shareholder proposals rather than requiring a separate proxy solicitation or inclusion of the proposal in the company’s proxy materials.
Other Amendments to Modernize Proxy Solicitation Rules
The SEC also proposed amendments to modernize several other rules related to the proxy solicitation process to reflect technological advancements and to reduce delays, costs, and uncertainty. These proposed amendments will:
-
eliminate the delivery requirement for annual report to security holders under Rule 14a-3(b) for companies that have filed a Form 10-K for their most recent fiscal year,
-
eliminate the 20-day deadline for delivery of a company’s proxy statement when documents or portion of documents, other than the annual report to securityholders, are incorporated by reference in a proxy statement and similarly in Forms S-4 and F-4,
-
rescind Rule 14a-6(g) to eliminate the requirement to submit Notices of Exempt Solicitation on EDGAR for an exempt solicitation under Rule 14a-2(b)(i), which is currently required if the solicitation was conducted in writing by a beneficial owner of over $5 million in market value of a company’s securities,1
-
shorten the minimum broker search period under Rule 14a-3 from 20 business days to five business days, and
-
require the inclusion of contact information (i.e., name, address, and telephone number) of a representative who can respond to filing-related questions and comments on the cover pages of Schedule 14A and Schedule 14C.
Key Takeaways
While the proposed amendments to modernize proxy solicitations would reduce compliance burdens and costs to public companies, the proposed rescission of Rule 14a-8 and deference to state law and private ordering for shareholder proposals would drastically alter the shareholder proposal landscape altogether. The proposed rescission, in particular, may face legal challenges by investors and shareholder proponents, as well as campaigns by investors to incorporate requirements based on current Rule 14a-8 in the company’s governance documents. In the meantime, public companies are encouraged to review and assess applicable state law requirements, their organizational documents (including any advance notice provisions), corporate governance policies, and existing practices to ensure that they are prepared to address the treatment of shareholder proposals in proxy statements or through floor proposals should the shareholder proposal rule be ultimately rescinded. Such proactive review may help companies effectively navigate an evolving regulatory landscape that increasingly emphasizes the role of state law in determining shareholder voting rights and governance standards. To the extent companies or stakeholders would like to comment on the proposed rules, comments should be submitted on or before November 20, 2025. Given the comment period deadline and the time required for final rulemaking, it is unlikely that any rescission of Rule 14a-8 would be effective for the 2027 proxy season.
1 The proposed amendments would eliminate the Notice of Exempt Solicitation entirely, whether mandatory or voluntary. The SEC acknowledged that in recent years the vast majority of these notices were submitted voluntarily and expects that the elimination of the Notice of Exempt Solicitation would reduce compliance burdens for large shareholders and avoid potential investor confusion related to the growing voluntary filings (which have been used as a means to disseminate investor views in advance of shareholder votes).