SEC proposes to rescind decades-old shareholder proposal rule and modernize proxy solicitation

On September 16, 2026, the SEC issued two rule proposals that, if adopted, would eliminate the federal shareholder proposal process and amend several long-standing proxy solicitation requirements. The first proposal would rescind Exchange Act Rule 14a-8, which regulates how shareholders submit proposals for inclusion in company proxy statements, and relatedly amend Exchange Act Rule 14a-4(c) to expand the circumstances in which companies may vote the proxies they receive on proposals that are not included on their proxy cards. The second proposal would modernize certain proxy solicitation requirements, including eliminating the requirement to deliver an annual report to security holders and shortening the minimum broker search period to five business days. 

Rule 14a-8 rescission

Background

Rule 14a-8 requires a company to include an eligible shareholder’s proposal in its proxy statement and on its proxy card unless the proponent fails to satisfy the rule’s eligibility or procedural requirements or the proposal is otherwise excludable.[1] Chairman Atkins has long questioned whether Rule 14a-8 exceeds the SEC’s authority and intrudes on state corporate law, and a December 2025 executive order also directed the Chairman to consider revising or rescinding Rule 14a-8.

Rescission proposal

The SEC proposes to rescind Rule 14a-8 in its entirety. The proposing release concludes that Rule 14a-8 exceeds the SEC’s authority under Section 14(a) of the Exchange Act and echoes long-standing policy grounds for rescission, including that:

• The premises on which the rule was adopted have not been borne out or are less compelling today;
• The rule has become a source of negotiating leverage and a platform for a small number of repeat proponents;
• The rule places the SEC in the position of making judgments about state law and company-specific corporate governance matters that are better left to state legislatures and courts; and
• The rule has inhibited the development of state law and private ordering. 

The proposing release also emphasizes the costs of the current regime, citing the SEC’s 2020 estimate that each proposal costs a company between $20,000 and $150,000 and a recent survey in which nearly one-quarter of responding companies reported direct costs of more than $500,000 over four years.

Implications of rescission

No federal right to inclusion. Whether a company must include a shareholder proposal in its proxy materials would be determined by state law and, if state law permits, the company’s governing documents. The proposing release notes that the SEC is not aware of any state’s corporate law or any company’s governing documents providing such a right.

Proponents could still present proposals and could still solicit for their proposals at their own expense. If Rule 14a-8 is rescinded, shareholders could still submit proposals in accordance with state law and a company’s advance notice bylaws (if any) for presentation at an annual meeting of shareholders. Shareholders could also solicit proxies in support of their proposals using their own proxy statement and proxy card.

State law open questions. With the proposed rescission of Rule 14a-8, there is an open question of whether states, particularly Delaware, will fill the void by regulating proponents’ access companies’ proxy statements for their proposals. Actions states could take range from banning such access, adopting criteria to permit such access only in limited circumstances or encouraging companies to adopt their own criteria in their bylaws through enabling statutes. States could also remain on the sidelines and defer to private ordering.

Omitting a proposal generally would not be misleading. The proposing release states the SEC’s view that omitting a shareholder proposal from the company’s proxy materials generally is not, without more, materially false or misleading. The SEC cautions, however, that a statement that management is unaware of any other business to come before the meeting, which is commonly included in proxy statements, could be materially misleading if the company has been notified that a shareholder intends to present a proposal.

Rule 14a-4(c) amendments

Current framework

The proposal would also amend Rule 14a-4(c), which governs when a company may vote the proxies it receives on shareholder proposals that are not included on its proxy card. Proxy cards can confer discretionary authority on the proxy holders, who are designated individuals at the company, to vote on matters that are not included in the proxy statement and not listed on the proxy card, if those matters are properly presented at the meeting. This process governs the “floor proposals” described above, since those proposals are not included as ballot items in a company’s proxy materials.

Under Rule 14a-4(c)(2), the proxy holders may exercise this discretionary authority on a proposal only if the company’s proxy statement discloses the nature of the proposal and how the company intends to vote, which is currently fulfilled in a brief sentence or two when such situations arise. Because the company receives all of the proxies returned in an uncontested meeting, this discretionary authority generally determines the outcome of a proposal, which are resoundingly defeated, whenever the proponent does not solicit proxies. 

Under the current rules, however, this discretionary authority falls away if the proponent:

• Notifies the company that it intends to deliver a proxy statement and form of proxy to holders of at least the percentage of shares required to carry the proposal;
• Includes the same statement in its proxy materials; and
• Provides evidence that it has done so. 

If a shareholder submitting a floor proposal satisfies these conditions, then it becomes a proxy contest. In that case, there are two competing proxy cards, and the proxies returned on the company’s card cannot be voted under the proxy holders’ discretionary authority on an omitted shareholder proposal. Since it is possible that votes cast in favor of the proposal on the shareholder’s card would be sufficient to lead to the proposal passing, the company may be compelled to include the proposal on its own proxy card even though not legally required to do so, in order to permit shareholders who want to vote on the proposal to use the company’s proxy card instead. The SEC notes that, if Rule 14a-8 is rescinded, more proponents may conduct their own solicitations, which would perpetuate this pressure.

Proposed framework

The proposed amendments would eliminate these shareholder solicitation conditions in Rule 14a-4(c)(2). A company could exercise discretionary authority to vote on a timely noticed proposal omitted from its proxy card, regardless of whether the proponent delivers its own proxy materials, if the company includes:

• In its proxy statement, a brief description of the matter and how the company intends to exercise its discretion; and
• On its proxy card, a cross-reference to that description and a box that, if checked, prevents the company from exercising discretionary authority with respect to the shares represented by that proxy card.

Key features of the proposed framework include:

• Active opt-out option. Leaving the box unchecked would grant discretionary authority to the company. 
• Company-controlled description. The description would be at the company’s discretion. Proponents would have no right to comment on or seek revision of the description, and the SEC expects that a brief description generally would suffice as it does today, subject to applicable antifraud provisions. 
• The box is not a vote. Checking the box only prevents the company from exercising discretionary authority to vote that shareholder’s shares on the shareholder proposals omitted from the company’s proxy card. It is not a vote on the proposals and does not have any impact on any of the other proposals or any other shareholders’ votes. 
• One box for all shareholder proposals. As proposed, the company can place one box on its proxy card that a shareholder can check to withhold discretionary voting authority for all omitted proposals, regardless of the number of omitted proposals.

Universal proxy cards not affected

The proposed amendments would not affect the ability of a proponent in a proxy contest that nominates no directors (a zero-slate campaign) to use the universal proxy card rules to include the company’s director nominees and management proposals on its own proxy card, along with its shareholder proposals. Shareholders who want to support a proposal that the company omits, however, would gravitate to the proponent’s proxy card and may use it to vote on all matters. Companies facing a zero-slate campaign with proposals likely to receive significant support may therefore still choose to include them, or would need to actively solicit for shareholders to return a later-dated company card since the last proxy card submitted is the one that controls. We understand that the SEC will consider comments regarding impact of the universal proxy card rules on zero-slate campaigns.

Takeaways

Rule 14a-8 remains in effect until a rescission becomes effective, and the current Rule 14a-4(c) will also continue to apply. The 2027 season will therefore proceed largely under the current rules and related Staff guidance but, unlike the 2026 season, without any Staff no-action letters or no-objection responses. The proposed rescission of Rule 14a-8 could create a “last chance” environment for proposals, so companies should prepare for what may be a challenging proxy season ahead. Legal challenges to Rule 14a-8 rescission, once adopted, are expected. Nonetheless, companies should review the impact and potential consequences of the proposed rules.

Proxy solicitation modernization proposal

The companion rule proposal would make five principal changes, some building on recent Staff interpretations.

• Annual report to security holders. Currently, Rule 14a-3(b) requires a proxy statement for an annual meeting at which directors are elected to be accompanied or preceded by an annual report to security holders that is submitted as Form ARS on EDGAR. Many companies now use their Form 10-K as the annual report, and the principal disclosures unique to the annual report are the stock performance graph and certain change-in-accountant information that is already required to be reported on Form 8-K. Under the proposed rules, the proxy statement would only need to be preceded by the filing of the Form 10-K for the most recent fiscal year or the furnishing of an annual report on EDGAR, and the stock performance graph required by Item 201(e) of Regulation S-K would be eliminated for companies other than business development companies and face-amount certificate companies. Companies could still issue a “glossy” annual report voluntarily if it is also submitted on EDGAR.
• Delivery deadline for documents incorporated by reference. Schedule 14A currently requires a proxy statement that incorporates information by reference to be distributed to shareholders at least 20 business days before the meeting, and Forms S-4 and F-4 impose a parallel requirement for prospectuses that incorporate information about the registrant or the company being acquired. Under the proposed rules, both requirements would be eliminated. The change could meaningfully compress timelines for mergers and other transactions requiring a shareholder vote. Other timing constraints would continue to apply.
• Notices of exempt solicitation. Rule 14a-6(g) currently requires a shareholder that beneficially owns more than $5 million of a company’s securities and conducts a written exempt solicitation under Rule 14a-2(b)(1) to submit a Notice of Exempt Solicitation on EDGAR. The SEC Staff historically did not object to voluntary notices by smaller holders who are not required by Rule 14a-6(g) to make such filings. In January 2026, the SEC Staff stated that it will object to voluntary notices, which it viewed as primarily a means of generating publicity. Under the proposed rules, Rule 14a-6(g) would be rescinded in its entirety, eliminating mandatory notices as well. 
• Broker searches. Rule 14a-13 currently requires a company to commence its broker search at least 20 business days before the record date. In January 2026, the SEC Staff issued guidance stating that it will not object if a company conducts its broker search less than 20 business days before the record date, provided that the company reasonably believes its proxy materials will be timely disseminated to beneficial owners. Under the proposed rules, the SEC would codify a five-business-day minimum for broker searches. A shorter period would help companies set record dates more quickly, including for M&A transactions, contested meetings and other time-sensitive votes. State law record date requirements and stock exchange notification requirements would continue to apply.
• Contact information. The cover pages of Schedules 14A and 14C would require the name, address and telephone number of a representative who can respond to questions about the filing, similar to the cover page requirements of registration statements.

Next steps

Comments on both proposals are due 60 days after publication in the Federal Register.