Securities Law Update: SEC Pulls Out of Shareholder Proposal Guidance and Other Key Regulatory Updates

Rules and Regulations

• SEC discontinues responses to 14a-8 no-action requests. On August 14, 2026, the SEC’s Division of Corporation Finance (CorpFin) announced that it will discontinue responding to Rule 14a-8 no-action requests entirely, effective immediately. Please see a concise summary of the statement below:
• SEC will no longer respond to 14a-8 no-action requests. CorpFin will no longer respond to Rule 14a-8 no-action requests, including requests under Rule 14a-8(i)(1) (proposals that are not a proper subject for action by shareholders under state law), which had previously been carved out of its November 2025 statement. In that statement, the SEC first announced it would not respond to no-action requests during the 2026 proxy season other than requests under Rule 14a-8(i)(1). This change is effective immediately and continues unless and until CorpFin announces otherwise.
• SEC will not issue any response letters. CorpFin also will no longer issue the response letters it had been providing under the November 2025 approach—letters stating that, based solely on a company’s or counsel’s unqualified representation of a reasonable basis for exclusion, the staff would not object to omission. Companies should not expect the staff to take a position on any intended exclusion.
• Rule 14a-8(j) notices are still required. Companies intending to exclude a proposal must continue to submit the notice and information required by the rule. Submissions must now be made through the online Shareholder Proposal Form; CorpFin’s shareholder proposal email address is no longer functional. Questions and other correspondence should also be submitted through the same form.
• SEC is refocusing on Securities Act and Exchange Act filings. CorpFin framed the change as a resource-allocation decision, citing the need to focus on Securities Act and Exchange Act filing reviews and the existing body of commission and staff guidance on Rule 14a-8. It also noted that the staff has never been legally required to respond to Rule 14a-8(j) notices, citing the 1976 informal procedures release.

Exclusion decisions will now need to rest on the company’s and its counsel’s legal analysis of the rule, prior staff guidance, and case law, without the benefit of staff response. Disputed exclusions will therefore likely need to be resolved through litigation. With companies challenging fewer proposals last year, shareholder proponents may be emboldened to submit more proposals this year. Conversely, companies may be more aggressive in their exclusions, given the relatively limited number of legal challenges to exclusions by proponents under the prior guidance. It may take several years for participants to settle into a new equilibrium.

• SEC submits proposed rules on executive compensation disclosure reform, rescission of Rule 14a-8, and proxy solicitation modernization to the Office of Information and Regulatory Affairs (OIRA) for review, indicating these noteworthy proposals may be publicly released soon. According to the SEC’s latest regulatory agenda, the SEC is aiming to release each proposal by October 2026.
• SEC announces new registration filing fee rate of $138.10 per million dollars, effective October 1, 2026. The SEC announced that the fees that public companies and other issuers pay to register their securities with the commission will decrease from $153.10 per million dollars to $138.10 per million dollars, effective October 1, 2026.
• SEC staff guidance exempts data-center securitizations from certain disclosure requirements. In a recent no-action letter, the SEC staff took the position that fixed-income or other securities issued in data-center securitizations (Data Center Securitizations) are not Exchange Act asset-backed securities (ABSs) because the securitized assets are not “self-liquidating financial assets” and therefore payments to investors do not depend primarily on cash flows from self-liquidating financial assets. As a result, Data Center Securitizations are not subject to the requirements that govern ABSs. Among the requirements the staff said do not apply is risk retention, which obligates the sponsor of an asset-backed issuance to keep a portion of the credit risk it sells so that its interests remain aligned with those of investors. Companies financing data-center and other digital infrastructure buildouts should expect the guidance to broaden access to a market that, according to data compiled by Bloomberg, grew from $2.4 billion of new issuance in 2020 to $15.5 billion in 2025. SEC Exempts Data-Center Bonds From Key Securitization Rules (Bloomberg Law, August 2026).

Other SEC Developments and Announcements

• SEC establishes a new Financial Reporting and Accounting Unit in the Enforcement Division. The new unit will focus on accounting and financial reporting fraud cases as well as general misconduct in the accounting and auditing area and will be staffed by both attorneys and accountants with specialized skills related to financial reporting, accounting, and auditing in securities regulation.

Other Matters of Interest

• NYSE proposes to extend the “internal audit” transition period to five years. On August 13, 2026, the SEC published notice of a proposed NYSE rule change to extend the internal audit transition period from one year to five. Under Section 303A.07(c) of the NYSE Listed Company Manual, NYSE-listed companies must have an internal audit function no later than the first anniversary of their listing date. According to NYSE, “issuers have expressed concern that developing a capable internal audit function within the first year of listing presents challenges as issuers adjust to life as a newly public company,” citing competing business and regulatory obligations. NYSE believes the extension is appropriate and should not raise investor protection concerns because other requirements, such as the CEO and CFO certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, will continue to provide sufficient assurance that companies are appropriately managing risk. NYSE points out that Nasdaq does not require listed companies to maintain an internal audit function at all.
• FinCEN ends CTA beneficial ownership reporting requirements for U.S. companies. On August 11, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN under the Corporate Transparency Act (CTA), effective August 14, 2026. FinCEN will also delete beneficial ownership information previously reported by U.S. persons, who are now exempt from the reporting requirements, from its database.
• DOJ pulls 1987 business review letter to ISS, raising the prospect of antitrust scrutiny. On August 5, 2026, the Department of Justice’s Antitrust Division (the Division) withdrew the 1987 business review letter (the 1987 letter) it had issued to Institutional Shareholder Services (ISS), in which the Division had stated it did not intend to bring an antitrust action to enjoin the establishment and operation of ISS. The Division explained that the 1987 letter was based on an understanding that ISS would advise only on corporate governance voting matters. According to the Division, ISS now offers corporate consulting services alongside its proxy advisory business, practices the Division characterized as outside the scope of, and in direct conflict with, the 1987 letter. The Division also cited ISS’s significant influence over corporate governance issues and policies through its proxy advisory business and flagged “significant competition concerns” arising from concentration in the proxy advisory market, noting that ISS and Glass Lewis jointly control more than 90% of that market.

The withdrawal reflects a broader, coordinated effort across antitrust and regulatory agencies—driven in part by ideological concerns about the influence of proxy advisors on corporate governance and ESG-related voting—to increase scrutiny of the proxy advisory industry. The Division’s action follows a December 2025 executive order directing agencies to review rules governing proxy advisors and the Department of Labor’s April guidance cautioning that proxy advisory firms may be acting as fiduciaries under federal law, suggesting that the withdrawal is one piece of a multi-agency campaign rather than a standalone Antitrust Division initiative.

Issuers should expect continued regulatory and political pressure on proxy advisors, and may see changes in how recommendations are formulated, how advisory and consulting services are separated, and how firms engage with companies during the proxy season.

• Delaware Court of Chancery holds Revlon inapplicable to directors of public benefit corporations. In Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P., the Delaware Court of Chancery, in its first written decision on the point, addressed the fiduciary duties and standards of review that govern directors of Delaware public benefit corporations (PBCs) in a sale-of-control transaction. The court concluded that Revlon’s duty to pursue the best price reasonably available for stockholders cannot operate as a standard of conduct for PBC directors, because DGCL § 365(a) obliges them to weigh stockholders’ pecuniary interests together with the interests of those materially affected by the corporation’s conduct and the public benefits identified in its charter—a balancing mandate the court found incompatible with a single-minded price-maximization rule.

The court left undecided whether a modified “PBC enhanced scrutiny” might apply as a standard of review, asking whether the directors’ balancing fell outside the range of reasonableness, but did not need to resolve this open question because the transaction had been approved by an independent special committee and so came within § 365(b), which deems a PBC director to have satisfied his or her fiduciary duties where the decision is “both informed and disinterested and not such that no person of ordinary, sound judgment would approve.” With the plaintiffs conceding the committee’s independence and disinterestedness, and challenging only the adequacy of the market check rather than the committee’s treatment of the other statutory interests, the court dismissed the fiduciary duty and aiding and abetting claims—adding that the claims would likewise have failed under new DGCL § 144 had the company not been a PBC.

Boards of PBCs, and companies weighing PBC status, should note that § 365(b) functions as a statutory business judgment rule for balancing decisions, but that its protection depends on a record showing the board was informed, disinterested, and actually considered the non-stockholder interests and stated public benefits.

• Delaware considers an “artificial intelligence company” sandbox for AI-run entities. On July 13, 2026, Delaware Secretary of State Charuni Patibanda-Sanchez and Norm Ai founder John Nay unveiled a proposal to authorize a new standalone entity form—the artificial intelligence company, or AIC—that would be run entirely by artificial intelligence while holding independent legal personhood, including the ability to own assets, the right to litigate, and a liability shield for its owner or parent company. The proposal, which has cleared a legislative subcommittee and could be taken up when the Delaware legislature reconvenes in January 2027, would authorize a 30-month pilot period beginning as soon as next year, with eligibility to participate determined by a committee of state officials, attorneys and industry leaders, and with AICs subject to dissolution by the Delaware Court of Chancery. Companies building or deploying agentic AI systems should monitor how the sandbox is designed as the proposal advances. AI-Run Companies Are Coming. Delaware Wants to Get Ahead of Them (Bloomberg Law, July 2026).

• Texas Stock Exchange proposes mandatory mirror voting. The Texas Stock Exchange (TXSE) filed a proposed rule change with the SEC that would amend TXSE Rule 13.003 to require an Exchange Member that holds shares for a beneficial owner who has not returned voting instructions to vote those shares in proportion to the instructions the Member did receive in that security — a form of “mirror voting.” The rule would reach only securities with their primary listing on TXSE, and TXSE would retain, as re-lettered Rule 13.003(d), the existing prohibition on discretionary voting in director elections, executive compensation, and other significant matters.

TXSE frames the change as replacing broker discretionary voting with a uniform, formula-driven process that ties outcomes on every matter to the preferences of the beneficial owners who actually vote, while leaving each owner’s right to vote, abstain or withhold untouched. TXSE argues that the change could help issuers achieve a quorum and reduce solicitation costs.

The SEC has extended the time period to consider the proposed rule change to September 9, 2026. Companies with, or considering, a primary TXSE listing should model how such mirror voting would affect their vote outcomes, particularly for matters requiring the approval of a majority of outstanding shares, where uninstructed shares would no longer operate in practice as votes against.

U.S. government presses the European Union (EU) to scale back sustainability due diligence rules for American companies. The U.S. government has formally asked the EU to significantly narrow two of its flagship sustainability laws, the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD), arguing that both still place unfair burdens on American businesses despite recent reforms. Specifically, the U.S. government requests that the EU:

• Significantly limit CSDDD and CSRD reporting and due diligence requirements on U.S. businesses, and limit enforcement actions against U.S. businesses.
• Limit the CSDDD’s due diligence requirements to activities and products linked to the EU market. 
• Establish a “presumed compliance” provision for companies operating in high-quality regulatory jurisdictions, such as the United States, and eliminate reporting and due diligence requirements for firms operating in countries with robust corporate governance and supply-chain mapping regulations.
• Keep mandatory climate transition plans out of the directive, consistent with their removal during the Omnibus process. Require third-party compliance verifiers to be independent, accredited, and properly overseen, to prevent inaccurate or conflicted reports.Bar any penalties on any U.S. business, or EU subsidiary of a U.S. business, that are based on revenue derived from activities outside the EU.
• Take a regulator-led approach, allowing civil claims to proceed only after the appropriate supervisory authority has assessed compliance and concluded that the company that is the target of the action failed to comply with the relevant CSDDD obligations.
• Narrow the definition of “stakeholders” under the CSDDD’s impact materiality assessment to include for an in-scope company the “employees, the employees of its subsidiaries and of its business partners, and their trade unions and workers’ representatives, and individuals or communities whose rights or interests are or could reasonably be expected to be directly affected by the products, services and operations of the company, its subsidiaries and its business partners and the legitimate designated representatives of those individuals or communities.”

Key practice contacts: David Bell, Ran Ben-Tzur, Amanda Rose, Wendy Grasso, Lilyanna Peyser, and Merritt Steele.

As a leading technology and life sciences law firm, Fenwick advises companies on the full suite of corporate governance matters. We partner with our clients to anticipate and navigate issues arising in an evolving corporate governance landscape, including SEC reporting and governance requirements of relevant securities exchanges, board and committee structure, corporate purpose and sustainability, shareholder engagement, and executive compensation.