What Boards Must Decide Now on Rule 14a-8 Shareholder Proposals

SEC Chairman Paul Atkins said on July 9 that the staff’s decision not to answer most exclusion requests this season proved a smaller federal role works for Rule 14a-8 shareholder proposals.

The Securities and Exchange Commission (SEC) has since gone further. On September 16 it proposed to rescind the rule entirely, with comments due November 20, 2026.

For boards and company secretaries, the 2026 proxy season was the first in which the staff gave companies no ruling on whether a proposal could be left out of the proxy statement. The proposal, if adopted, would remove the federal framework that governs those decisions.

How Rule 14a-8 shareholder proposals changed in 2026

Rule 14a-8 requires a public company to include a qualifying shareholder proposal in its proxy statement unless the company can point to one of 13 listed grounds for exclusion. Before this season, companies that wanted to leave a proposal out typically asked the SEC’s Division of Corporation Finance for a no-action letter, a staff statement that it would not recommend enforcement.

On November 17, 2025, the Division said it would not respond to most requests for the proxy season running from October 1, 2025 to September 30, 2026. The exception was requests under Rule 14a-8(i)(1), which covers proposals that are not a proper subject for shareholder action under state law. The Division also said the absence of a staff response does not mean a company lacks a reasonable basis to exclude a proposal.

On August 14, 2026, the Division went further. It stopped responding to all Rule 14a-8 no-action requests, including those under (i)(1), “effective immediately, unless and until the Division announces otherwise.” Companies must still send the Commission a Rule 14a-8(j) notice when they plan to exclude a proposal, now through the online Shareholder Proposal Form.

Commissioner Caroline Crenshaw criticized the November announcement as a policy choice rather than a response to limited staff resources.

What Atkins told the governance conference

Atkins spoke on July 9 at the Society for Corporate Governance conference. He said predictions of mass exclusions did not come true and that adverse proxy adviser recommendations over exclusions were rare.

“Ultimately, this season proved both a turning point and a proof of concept.” Paul S. Atkins, Chairman, U.S. Securities and Exchange Commission

He described the staff’s step as “removing the training wheels from the shareholder proposal bicycle” and said the Commission staff’s interposition between companies and proponents is unnecessary.

Atkins gave several figures. The Division received no request at all under Rule 14a-8(i)(1) this season. Six lawsuits were filed against companies for excluding a proposal, which he put at less than 4% of the proposals companies said they intended to exclude after the Division’s announcement. One suit was resolved in the company’s favor and three were settled.

He also said one individual was the sole or lead proponent on about 41% of the proposals that reached a vote, and that only 8% of that person’s proposals won majority support.

Proposal and exclusion data from the 2026 season

The SEC has not published season-wide totals for exclusions. Law firm tallies point in the same direction as Atkins’s account.

Mayer Brown counted about 789 shareholder proposals filed in 2026, down from 951 in 2025, a fall of roughly 17%. About 7% of proposals that went to a vote won majority support, against 14% a year earlier. Anti-ESG proposals made up about 20% of those voted on, and none passed.

Gibson Dunn, which measured exclusion requests from October 1, 2025 to July 1, 2026, found that requests “dropped sharply” while the share of proposals excluded “ticked up slightly.” It also reported heightened litigation over excluded proposals. Its figures cover different date ranges from Mayer Brown’s, so the two cannot be added together.

The data supports part of the Atkins argument: companies did not exclude on a wide scale once the staff stepped back. It also shows that disputes that once ended in a staff letter now more often reach a court.

SEC plan to rescind Rule 14a-8 shareholder proposals

The proposal, Release No. 34-106383 (File No. S7-2026-32), says Rule 14a-8 “exceeds the scope of the Commission’s statutory authority.” The SEC would leave shareholder proposals to state law and to company governing documents where a state permits it. Atkins wrote that the issue “must be resolved by the state in which a company domiciles.”

A companion change would amend Rule 14a-4(c), which governs when a company may use discretionary voting authority on proposals that arrive outside Rule 14a-8. A company could do so if it describes the matter and its voting intent in the proxy statement, refers to that disclosure on the proxy card and adds a check box that lets a shareholder withhold discretionary voting for its shares. Under the current rule, a single proponent can block discretionary voting by soliciting enough holders to carry the proposal.

Two conforming changes matter for the proxy calendar. Under Rule 14a-5(e), the proposal submission deadline would follow state or foreign law or the governing documents. Under Rule 14a-6(a), including or excluding a proposal would not on its own require a preliminary proxy filing.

Atkins, Commissioner Hester Peirce and Commissioner Mark Uyeda issued statements supporting the proposal. Rule 14a-8 stays in force until the Commission adopts a final rule.

Board and company secretary decisions on proposals

The two actions leave governance teams with a short list of questions. Each ties to existing board reporting, a subject covered in Essential Reporting for Boards.

• Exclusion calls: with no staff view, the decision to exclude a proposal rests on the company’s own reading of the thirteen grounds, and the six lawsuits show proponents will challenge it.
• Governing documents: if the rescission is adopted, any company-level rules on proposals, including submission deadlines, would come from state law and the charter or bylaws.
• Discretionary voting: Rule 14a-4(c) would give companies a new path to vote on proposals submitted outside the rule, with disclosure and an opt-out box.
• Comment letters: the 60-day window gives issuers, investors and counsel a formal route to respond before November 20.

The shift also changes who holds the evidence of oversight. Boards that once relied on a staff letter now need their own record of why a proposal was excluded, an issue that connects to how governance tools shift power inside companies and to the broader fault lines in corporate governance.

Investor reaction to the Rule 14a-8 rescission

Investor groups opposed the proposal. The Council of Institutional Investors called it “a solution in search of a problem.” Its executive director, Glenn Davis, said proposals can expose gaps between investor and management views and sometimes lead to compromise before a vote.

The Interfaith Center on Corporate Responsibility called the move an attack on shareholders’ fundamental rights. Better Markets and Freedom to Invest also criticized it, saying it could reduce transparency.

Atkins has cast the case differently. In his July speech he urged participants not to let the process be “weaponized by those who represent fringe interests.” He also said annual meetings are not vehicles for political or social debates with little bearing on the company.

Law firm commentary on the rescission expects substantial litigation if it is adopted. The SEC’s own proposing materials say state courts are the proper venue for disputes over proposals under state law and governing documents.

Comments on both proposals are due November 20, 2026. Until the Commission adopts a final rule, companies must keep filing Rule 14a-8(j) notices when they plan to exclude a proposal.