On November 17, 2025, the staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) issued a statement (the “Statement”) announcing a significant change to the Staff’s traditional role in the Rule 14a-8 shareholder proposal process.[1] The change introduces a new element of uncertainty to a decades-old practice. Below we provide background on the shareholder proposal process, provide an overview of the Statement, related Staff guidance and their implications for companies, discuss potential responses from shareholder proponents and note further potential changes on the horizon.
A shareholder may submit a proposal for inclusion in a company’s proxy materials, provided the proposal satisfies certain procedural and substantive requirements in SEC Rule 14a-8. Each year shareholder proponents submit approximately 800-1000 proposals, typically in connection with annual shareholder meetings held during the spring season. If a proposal does not meet the procedural or substantive requirements of Rule 14a-8, a company has a basis to exclude the proposal.
Rule 14a-8(j) requires a company to notify the SEC and proponent of its reasons for excluding a proposal no later than 80 calendar days before the company files its definitive proxy statement. The Rule 14a-8(j) notice must include an explanation of why the company believes it may exclude the proposal, which should, if possible, refer to the most recent applicable authority such as prior Staff no-action letters. The notice must also include a supporting legal opinion of counsel when the company’s basis for exclusion is based on matters of state or foreign law.
Companies have typically satisfied the Rule 14a-8(j) notification requirement by submitting a letter requesting that the Staff not recommend enforcement action to the SEC if the company excludes the proposal from its proxy materials. Historically, the Staff has reviewed and evaluated the legal arguments made in no-action requests, and any counterarguments from proponents, and then issued a response stating whether it agrees or disagrees that a company has a basis under Rule 14a-8 to exclude the proposal. The Staff’s no-action responses are informal and non-binding.
During the 2024-2025 proxy season, the Staff received approximately 370 no-action requests and concurred that a company had a basis to exclude a proposal in approximately 50% of those requests. The Staff disagreed with approximately 25% of requests and the remaining requests were withdrawn by the company or were otherwise not acted upon.
The Statement provides that, until at least September 30, 2026, the Staff will not respond to any Rule 14a-8 no-action requests, with the narrow exception of those seeking to exclude a proposal under Rule 14a-8(i)(1), which provides an exemption for proposals that are improper under applicable state law. If a company determines that it may exclude a proposal from its proxy statement, it must still notify the Staff of its reasons for doing so as required by Rule 14a-8(j). Further, if a company or its counsel includes an unqualified representation in its notice that there is a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance and/or judicial decisions, the Staff will respond by letter noting that it will not object to the company’s exclusion of the proposal based solely on the representation of the company or its counsel. Unlike previous years, the Staff will not express its own view (except potentially with respect to Rule 14a-8(i)(1)).
The Statement also notes that the absence of prior Staff responses to similar shareholder proposals and prior Staff responses that declined to confer no-action relief do not mean that companies cannot form a reasonable basis to exclude the same or a similar proposal under the Staff’s new procedures. In subsequent meetings with stakeholders, Staff members have emphasized that historically the vast majority of no-action requests had a reasonable basis to exclude the proposal, regardless of their outcome, and the fact that a proposal may present a close call does not mean that a company cannot make a reasonable basis representation. Although this aspect of the Statement received strong criticism from SEC Commissioner Caroline Crenshaw,[2] the Statement and subsequent guidance from the Staff have emphasized that no-action letters were informal, non-binding guidance, and that there are numerous other facets of the federal securities laws where issuers are responsible for reaching their own conclusions without input from the Staff (and on which, as a matter of policy, the Staff will not advise).
From a procedural standpoint, the Statement does not affect the process for submitting a notice under Rule 14a-8(j) to the Staff or to the proponent. In addition, to provide information to the public, the Staff has redesigned the shareholder proposal page of the SEC’s website to list notifications received under Rule 14a-8(j) for which the Staff has not provided a response, those for which it has provided a response, and those relating to traditional no-action requests seeking to exclude proposals under Rule 14a-8(i)(1).[3] The Staff has advised that this page will be updated frequently during the upcoming proxy season. Since issuing the Statement, the Staff also has indicated that it has made no determination with respect to its treatment of shareholder proposals beyond the current proxy season, but that it expects the new procedure to be successful and that it will assess practices for the current proxy season before making a decision regarding the 2026-2027 proxy season.
The Statement may have significant and as yet unknown consequences for how proponents act during this proxy season and beyond. Many proponents may choose to watch and analyze how companies interpret and rely on the Statement. To the extent that the number of proposals excluded generally approximates past trends, proponents may not dramatically change their proposal submission strategies and engagement with companies.,
In some cases, however, proponents may raise their concerns through other means, such as submitting a floor proposal for consideration at a company’s annual meeting (subject to meeting the requirements of any company advance notice bylaw) or filing exempt solicitation notices that appear on the company’s EDGAR page. Certain proponents may also consider initiating their own solicitations under Rule 14a-4, which would allow them to solicit proxies in support of a shareholder proposal included in their own proxy materials. Proponents conducting such a solicitation would not be limited by the procedural requirements of Rule 14a-8, including ownership thresholds and a restriction on submitting more than one proposal for a single meeting. Proponents may also organize “vote no" campaigns against the reelection of company directors or other company proposals. Finally, proponents could initiate litigation in federal or state court to challenge a company’s decision to exclude a proposal or submit books and records demands in order to evaluate a company’s decision to exclude a proposal.
SEC Chairman Atkins has voiced concerns about the shareholder proposal process and Rule 14a-8 and has signaled that further changes may be forthcoming. Although the Staff has cautioned that the Statement should not be viewed as a precursor to regulatory action, on its most recent regulatory agenda, the SEC indicated that it may consider (unspecified) amendments to Rule 14a-8. The Statement also follows a speech in which the Chairman questioned whether precatory (i.e., non-binding) shareholder proposals are a “proper subject” for shareholder action under Delaware law.[4] Proposals that are not a proper subject are excludable under Rule 14a-8(i)(1). As virtually all shareholder proposals are precatory, a ruling by a Delaware court that shareholders have no general right to bring precatory proposals, would in effect allow Delaware companies to exclude most shareholder proposals. To date no Delaware court has weighed in on this issue.
The Chairman noted that if a company makes an argument along the lines noted above and obtains an opinion of counsel that a proposal is not a “proper subject” for shareholder action under Delaware law, the Staff will very likely agree with this position. It is notable that, under the Statement, the Staff will still entertain no-action letter requests during the current proxy season that cite Rule 14a-8(i)(1) as the basis for exclusion. The Chairman also has highlighted the SEC’s ability to certify questions for clarification to the Delaware Supreme Court,[5] a process which the SEC could use to obtain a declaratory judgment from the Court on whether precatory proposals are a proper subject for shareholder action under Delaware law. Other jurisdictions may also weigh in on whether precatory proposals are a proper subject under their respective corporate codes.
The Statement introduces a new level of uncertainty in the shareholder proposal process, requiring companies and proponents to evaluate how to present and react to shareholder issues without the traditional playbook. The Staff emphasized that companies should exercise judgment in applying Rule 14a-8 exclusions, as they do with other areas of securities law compliance without a Staff “referee.” Notwithstanding this guidance, it is difficult to predict how the absence of the Staff referee will affect the eco-system of company-shareholder interactions for the upcoming proxy season and potentially beyond.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Securities and Capital Markets practice.
[5] See Delaware Constitution, art. IV, §11(8) (expressly permitting certification of questions from the SEC, in addition to other courts).
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