The SEC proposes to rescind the shareholder-proposal rule outright

The Securities and Exchange Commission proposed on 21 September 2026 to rescind Rule 14a-8, the rule that since 1942 has required a company to carry qualifying shareholder proposals in its own proxy materials.¹ The Commission would “leave determinations about the role of shareholder proposals to State law and company governing documents,” and would separately amend Rule 14a-4 “to expand the circumstances under which a company may exercise, with respect to proxies it receives, discretionary voting authority on proposals that will be presented at a shareholder meeting but not included in the company’s proxy materials.”¹ Comments close 20 November 2026.¹

1. The first ground is authority, not policy. The Commission argues that because “section 14(a) empowers the Commission to regulate the proxy solicitation process—not codify its own understanding of State law rights as a matter of Federal law—Rule 14a-8 exceeds the Commission’s authority under section 14(a).”¹² The release opens on the proposition that “[c]orporations are creatures of state law,” quoting Cort v. Ash, and that no principle is “more firmly established than a State’s authority to regulate domestic corporations, including the authority to define the voting rights of shareholders,” quoting CTS Corp. v. Dynamics Corp. of America.¹³⁴ The reasoning is that the rule’s thirteen substantive bases for exclusion in Rule 14a-8(i) operate “as a Federal standard governing when a matter is properly put before shareholders for a vote through the proxy,” while only two of the thirteen — (i)(1) and (i)(2) — refer directly to State law at all.¹⁵

2. Policy is offered as an independent ground, which matters if the authority argument fails. The Commission writes that “[i]ndependent of our lack of statutory authority, there are also policy reasons for rescinding Rule 14a-8 in its entirety,” and rests them on the justifications Chairman Ganson Purcell gave in 1942: that the cost to companies was “small,” that proposals were often accepted or well-supported, that volume was low, and that State-law rights were “reasonably clear.”¹⁶ Each is said to have weakened. On cost the release reports that the Commission’s own 2020 rulemaking “estimated that the cost to a company ranged from $20,000 to $150,000 per proposal,” and cites a survey of 35 public-company respondents in which 20 percent reported four-year aggregate direct costs below $100,000 and 17.1 percent reported between $251,000 and $500,000.¹ On growth it observes that “the predecessor to Rule 14a-8 was a little over 200 words whereas the current provision is over 3,000 words.”¹

3. The mechanism the rule is being measured against had already been switched off. On 14 August 2026 the Division of Corporation Finance “announced that, effective immediately, it had determined to discontinue responding to Rule 14a-8 no-action requests entirely,” and would no longer respond to notices filed under Rule 14a-8(j) either; a narrower statement on 17 November 2025 had already changed the Division’s role for that proxy season.¹⁷⁸ The release is explicit about what this does to its own evidence: “data in our analysis from any date on or after Nov. 17, 2025 reflects exclusions based on a company’s notice of exclusion rather than a response to a no-action request.”¹ Companies remain required to file the notice; what has gone is the staff answer.¹

4. The companion amendment moves the default on proposals the company never had to carry. 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,” provided the company gives a brief description of the matter and how it intends to vote, a cross-reference on the proxy card, and “a check box on the proxy card that, if checked by a shareholder, would prevent the company from exercising its discretion.”¹ The Commission notes that it “declined to adopt a check box requirement in 1998 due, in part, to some commenters’ concerns about potential shareholder confusion.”¹ The shift is in who can stop it: today a single proponent meeting the solicitation threshold “may prevent the company from exercising discretionary voting authority with respect to all proxy cards that the company receives,” whereas under the proposal each shareholder could object only “solely with respect to the proxy card the shareholder returns.”¹ The Commission states there are “independent justifications” for this amendment “even if the proposed rescission of Rule 14a-8 is not adopted.”¹

The shape of the argument is one the corpus has recorded elsewhere this year. Labor rescinded the Executive Order 11246 regulations and found it lacked authority for them; EPA repealed the power-plant carbon standards and then proposed that it had never had the power to issue them (see Labor rescinds the Executive Order 11246 regulations and finds it lacks authority for them and EPA repeals the power plant carbon rules, then proposes it lacked the power).⁹ In each case the agency is not only withdrawing a rule but denying that the rule was ever within its gift, which is a claim about what a future administration could restore.

What the rescission would affect is not marginal. For meetings held in 2025 the release counts 786 proposals submitted under Rule 14a-8, of which 64 percent were included and voted on, 22 percent omitted and 14 percent withdrawn; 74 percent went to S&P 500 companies, and of the proposals whose proponent could be identified, 53 percent came from individuals and 47 percent from institutions.¹ This post reports the proposal as proposed; nothing in it is in force.¹