SEC Proposes Rescission of the Shareholder Proposal Rule 14a-8 and Changes to Rule 14a-4
What You Need To Know
- The Securities and Exchange Commission is proposing to rescind Rule 14a-8, which would eliminate shareholders’ ability under federal law to require that their proposals be included in a company’s proxy statement and instead leave it to state law and company governing documents to determine whether, and under what circumstances, shareholder proposals must be included in company proxy materials. The SEC argues that Rule 14a-8 exceeds the agency’s statutory authority and that shareholder proposals are a matter of state law. The SEC also argues that, irrespective of its legal basis, the underlying premises of the rule’s original adoption have proven to be inaccurate, and the rule should be repealed as a matter of wise policy.
- The SEC is also proposing amendments to Rule 14a-4(c) that would, if adopted, provide companies with greater flexibility to seek and obtain discretionary voting authority on certain proposals that will be presented at a shareholder meeting but are not included in the company’s proxy materials. Shareholders would be able to opt out of allowing the company to exercise such authority over their individual shares.
On September 16, 2026, the U.S. Securities and Exchange Commission (SEC) issued a proposed rule that would, if adopted, rescind Rule 14a-8 in its entirety, leaving shareholder proposals to state law and company governing documents. As part of the same release, the SEC also proposed amendments that would expand the circumstances under which a company may exercise discretionary voting authority on proposals that will be presented at a shareholder meeting but are not included in the company’s proxy materials.
In a separate release issued the same day, the SEC proposed rules that would modernize proxy solicitations by:
- Eliminating the requirement that a company deliver an annual report to security holders where a report on Form 10-K has already been filed
- Eliminating the delivery deadline when documents are incorporated by reference into a proxy statement
- Eliminating the requirement to file soliciting material regarding certain exempt solicitations
- Shortening the minimum broker search period for proxy solicitations
Taken together, the proposed rules would implement constructive and meaningful changes to the proxy season process and allow public companies to operate on more compressed proxy timelines.
This alert summarizes the key provisions of the proposed rescission of Rule 14a-8 and amendments to Rule 14a-4(c).
Rescission of Rule 14a-8 in Its Entirety
The SEC is proposing to rescind Rule 14a-8 entirely, concluding that the rule exceeds the SEC’s statutory authority under § 14(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The SEC’s legal analysis centers on the view that § 14(a) authorizes the SEC to regulate the proxy solicitation process and require disclosure to ensure that shareholders are adequately informed, but it does not authorize the SEC to define or expand the substantive scope of shareholder voting rights, which are matters of state corporate law. In the SEC’s view, by dictating when a shareholder proposal “must be included in, or may be excluded from, a company’s proxy materials, the SEC effectively dictates the scope of shareholder voting rights and, therefore, exceeds its authority.”
The proposing release also identifies a number of policy reasons for rescinding Rule 14a-8, including the foundational premises upon which its adoption was based. First, the cost to companies of addressing and including shareholder proposals in proxy materials is no longer small. Second, most shareholder proposals today do not receive majority shareholder support and are not supported by management. Third, the volume of shareholder proposals has increased significantly over time in comparison to the increase in the number of companies required to file proxy statements. While the SEC originally assumed that state law would clearly delineate which matters are proper for a shareholder vote, it has come to realize that state law is often unclear or silent on this issue and has taken the position that it should not be the one making that determination.
The release also flags an interesting related dynamic. Because excluding or attempting to exclude a proposal exposes a company to litigation risk and costs, proponents can use Rule 14a-8 as leverage to extract concessions through private settlement even where they have little realistic chance of prevailing in an actual vote. The SEC underscores that settlement can give a proponent a more certain path to a tangible outcome than proceeding to a vote, particularly since most shareholder proposals are nonbinding even when they receive majority support, and majority support itself is rare, with only roughly 7% of proposals submitted in 2025 and 11% of proposals voted on in 2025 achieving it. In the SEC’s view, this pattern (reinforced by withdrawal rates as high as 18.4% to 32.1% between 2021 and 2025) reflects a use of Rule 14a-8 that has drifted from its original purpose of facilitating informed shareholder voting. The SEC also notes that in the current era many of the proposals are not in the interests of shareholders broadly, pointing to the low rates of support, but have costs that are borne by investors seeking financial returns.
Critics of the proposed rescission argue that it is part of a broader pattern of SEC rulemaking that favors companies over investors and is designed to silence shareholder voice. The proposing release itself acknowledges a number of significant concerns with the rescission. For example, the SEC recognizes that the proposed rescission could disproportionately affect less well-resourced proponents, including individual retail investors and smaller advocacy groups, for whom independent proxy solicitation could be cost-prohibitive. Individual proponents accounted for approximately 45% of proposals submitted between 2022 and 2025, a share that rose to 53% in 2025, meaning the group potentially most affected by the rescission is also responsible for a growing share of proposal activity.
If adopted, rescission of Rule 14a-8 would shift determinations about shareholder proposals, including what proposals may be properly presented, who may submit them, and under what conditions, to state law and, where permitted, company governing documents.
The proposing release also anticipates how shareholder proponents, companies, and states may respond if rescission is adopted. For shareholder proponents, the SEC expects greater reliance on independent proxy solicitations as the principal substitute for the Rule 14a-8 process, though it anticipates this route will be used selectively, primarily for proposals proponents view as justifying the added cost. The release also anticipates increased use of other existing engagement channels, including “voting in director elections and on management proposals, communicating with management informally, conducting exempt solicitations, calling a special meeting of shareholders, acting by written consent, nominating one or more directors for election to a company’s board of directors, using proxy access provisions, making floor proposals or nominations, using social media platforms, and leveraging threat of divestment.” The SEC acknowledges, however, that these alternatives are imperfect substitutes for Rule 14a-8 and may be less accessible to individual investors and other less-resourced proponents, a group that has accounted for a growing share of Rule 14a-8 submissions in recent years.
The SEC also anticipates that rescission will prompt greater legislative activity at the state level, noting that, with limited exception, states have not enacted comprehensive shareholder proposal statutes in the more than 80 years Rule 14a-8 has been in effect. The release attributes this inactivity in part to uncertainty over whether Rule 14a-8 preempts state law and expects that eliminating the federal rule will remove that disincentive.
The SEC expects that companies, where permitted by state law, may adopt their own shareholder proposal standards through charter or bylaw provisions.
The release acknowledges a likely transition period, potentially lasting several years, during which state legislatures and courts work through unresolved questions (such as the treatment of precatory proposals) left open by the rescission of Rule 14a-8, along with a corresponding increase in related litigation. However, the SEC contends that these variations and uncertainties do not authorize federal regulatory intervention and that private ordering through corporate charters and bylaws provides the appropriate framework for addressing shareholder proposal rights on a company-by-company basis. It is worth noting that similar private ordering has been undertaken for more than a decade as it relates to proxy access for director nominations.
Amendments to Rule 14a-4(c)
To address shareholder proposals that may be submitted through independent solicitations following rescission of Rule 14a-8, or outside of the current rule, the SEC proposes amending Rule 14a-4(c) to expand the circumstances under which a company may exercise discretionary voting authority.
Under the proposed amendments, Rule 14a-4(c)(2) would no longer prohibit a company from exercising discretionary voting authority with respect to timely received shareholder proposals submitted outside the Rule 14a-8 process, regardless of whether the shareholder proponent delivers its own proxy materials to holders of the requisite percentage of the company’s shares necessary to carry the proposal. A company could exercise discretionary voting authority to vote against shareholder proposals received but not included in its proxy materials, provided the company includes the following:
- A brief description of each omitted matter (for example, “a non-binding proposal from a pension fund that the company adopt a proxy access bylaw provision”) and how the company intends to exercise its discretionary voting authority
- A cross-reference on the proxy card to this disclosure in the proxy statement
- An opt-out check box on the proxy card that would prevent the company from exercising such authority
As proposed, Rule 14a-4(c) would not establish a right of proponents to comment on, or seek revision of, the description of the omitted matter.
The release also ties this proposal to a related concern arising from the interaction between Rule 14a-4(c)(2) and the “bona fide nominee” rule (Rule 14a-4(d)(1)), which was amended alongside the universal proxy rules in 2021. Under the current rules, a proponent may include the company’s own director nominees on the proponent’s proxy card without offering competing nominees—a so-called “zero slate” campaign—making that card more attractive to shareholders who wish to vote for the company’s nominees but also vote on the proponent’s proposal using a single card. Companies facing zero slate campaigns may feel compelled to include the proponent’s proposal on the company’s own card, at the company’s expense, simply to keep shareholders voting on the company’s card rather than switching to the proponent’s. The release cites several recent examples of this phenomenon. By allowing companies to exercise discretionary voting authority over an omitted proposal (subject to the shareholder opt-out described below), the proposed amendments are intended to relieve this pressure, allowing a company to omit a proponent’s proposal from its own card without forfeiting its own ability to cast votes on that proposal through the exercise of discretionary voting authority over the proxies it collects.
The proposed shareholder opt-out mechanism represents a novel feature: A shareholder could check a box on the company’s proxy card to prevent their shares from being voted at the company’s discretion on matters not included in the proxy materials. If a shareholder checks the opt-out box, their shares would not be voted on such omitted matters. If the shareholder does not check the box, the company would be authorized to vote those shares. The SEC encourages the use of a single check box for all such matters but noted that a company could voluntarily provide multiple check boxes for multiple nonmanagement proposals subject to discretionary voting authority, should a company wish to provide shareholders with additional flexibility. This mechanism is intended to provide shareholders with a choice while streamlining the process for companies facing independent solicitations.
The SEC estimates that if both the rescission of Rule 14a-8 and the amendments to Rule 14a-4(c) are adopted, the combined effect may reduce proponents’ incentives to conduct independent solicitations as a substitute for the Rule 14a-8 process, because the expected probability of obtaining majority support would be reduced.
Related Changes to Preliminary Filing and Disclosure Requirements
The release also proposes several conforming amendments to filing and disclosure requirements to align with the proposed rescission of Rule 14a-8 and the amendments to Rule 14a-4(c). Under current Rule 14a-6(a), companies are not required to file a preliminary proxy statement solely because it includes a Rule 14a-8 proposal, but the rule contains no analogous exemption for proposals submitted outside that process. Furthermore, current Rule 14a-6(a) explicitly states that companies are not excluded from filing a preliminary proxy statement if they, in their proxy materials, comment upon or refer to a solicitation in opposition. The SEC proposes to amend Rule 14a-6(a) (and, correspondingly, Rule 14c-5(a) for information statements) so that a company would not need to file a preliminary form solely because it receives a shareholder proposal outside of Rule 14a-8 or discloses its discretionary voting intention with respect to such a proposal. A preliminary filing would still be required, however, if the proposal (or the company’s director election) involves a “solicitation in opposition” —generally, a non-exempt solicitation subject to Rule 14a-19, a solicitation against the company’s director nominees, a solicitation against a proposal the company expressly supports in its proxy materials, or a solicitation in favor of a proposal the company does not expressly support in its proxy materials—provided the company knows, or reasonably should know, of the solicitation.
The SEC also proposes to delete Note 2 to paragraph (a) of Rule 14a-6, which currently instructs companies to verify the accuracy and completeness of their proxy material disclosures, and to remove Item 4 of Schedule 14C, which currently requires a company to identify and describe a timely received shareholder proposal in an information statement. Companion amendments to Rule 14a-5(e) and (f) would revise the deadlines companies must disclose regarding shareholder proposals and director nominations to reflect the proposed rescission of Rule 14a-8, and the release proposes to remove references to Rule 14a-8 throughout the federal proxy rules more generally.
Advance Notice Bylaws
The proposed amendments to Rule 14a-4(c)(1) would tie the default deadline for determining whether a company received timely notice of a shareholder proposal to the deadline established under the company’s governing documents or applicable state law, with a regulatory fallback only in the absence of such a provision (45 days in advance of the anniversary of the prior year proxy statement). As a result, if the rescission is adopted, a company’s advance notice bylaw provisions would become the primary mechanism for setting submission deadlines, eligibility requirements, and procedural standards for shareholder proposals presented outside the Rule 14a-8 framework. Companies that do not currently have robust advance notice bylaws, or whose bylaws were drafted primarily with director nominations and non-14a-8 proposals in mind, should consider whether their existing provisions adequately address shareholder proposal submissions, including any substantive or procedural requirements that were previously governed by Rule 14a-8.
Next Steps
The proposal is subject to a 60-day public comment period following publication in the Federal Register. The final rules could be adopted in early 2027. However, given the significance of Rule 14a-8’s proposed rescission, the SEC’s explicit reconsideration of its statutory authority, and its acknowledgment of longstanding reliance on the rule, the proposal—if adopted—may face legal challenges that could affect the timing and ultimate scope of any final rules.
As a result, it remains unclear what impact, if any, the proposed rules will have on the 2027 proxy season, though they could have far-reaching consequences for future proxy seasons. While the rulemaking remains pending, we could see a surge in Rule 14a-8 proposal submissions, as proponents seek to submit proposals while the rule remains available, including proposals seeking to preserve shareholder proposal rights under a company’s governing documents in anticipation of rescission of Rule 14a-8. If the rescission of Rule 14a-8 is ultimately adopted, we could then see a drastic decline in shareholder proposals, particularly given that many proponents are unlikely to bear the significantly greater cost and complexity of filing their own proxy statement and independently soliciting votes, which would become their primary channel for pursuing such proposals. The rescission could also lead to an increase in shareholder proposals to advance, through bylaw amendments, matters such as political spending, human rights or environmental/sustainability initiatives that were previously the subject of precatory proposals under Rule 14a-8.
At this stage, companies preparing for the 2027 proxy season should operate on the assumption that the current framework remains in place, but they should continue to monitor developments closely and begin considering how the proposed changes would affect their proxy statement preparation, shareholder engagement strategies, and annual meeting planning if the proposal is finalized.