On September 16, 2026, the SEC issued its much-anticipated proposal to rescind Rule 14a-8 under the Securities Exchange Act of 1934 (the Exchange Act), the shareholder proposal rule, in its entirety. If adopted, the proposal would eliminate the federal framework governing when an issuer must include a shareholder proposal in its proxy materials. Instead, state law and, where permitted by state law, an issuer’s governing documents would determine whether and when shareholder proposals must be included.
The SEC also proposed amendments to Exchange Act Rule 14a-4(c) that would expand an issuer’s ability to use proxies returned on its proxy card to vote on shareholder proposals omitted from that card. The issuer’s proxy card would be required to include a check box allowing each shareholder to withhold that authority with respect to its shares. As discussed below, the amendments are intended to address a feature of the current rules that can effectively pressure issuers to include on their proxy cards shareholder proposals submitted outside the Rule 14a-8 process.
As we discuss below, the rescission of Rule 14a-8 and changes to Rule 14a-4(c) could mean that independent solicitations (outside of a company’s proxy) could increase and that the question of what obligations companies owe to shareholders on proposal topics moves to statehouses and company governance—creating less uniformity across individual company practices.
The table below summarizes what would change for issuers; we look at each change, and the SEC’s reasoning, in more detail below.
| Topic | Current Practice | Proposed Change | Impact to Issuers |
|---|---|---|---|
| Shareholder Proposals | An eligible shareholder can require an issuer to include its proposal in the issuer’s proxy materials unless an exclusion applies. | Rescind Rule 14a-8 in its entirety. | No federal right to inclusion; a proponent seeking a proxy vote would solicit at its own expense. |
| Source of Inclusion Rights | The federal Rule 14a-8 framework governs. | Leave the role of shareholder proposals to state law and, where state law permits, the issuer’s governing documents. | An issuer-by-issuer question of state law and governing documents; with only one state (Texas) having legislated, expect uncertainty. |
| Discretionary Voting Authority | An issuer may not vote proxies on a timely proposal submitted outside Rule 14a-8 and omitted from its card once the proponent solicits holders of enough shares to carry it. | Drop that threshold; an issuer could vote proxies on an omitted proposal if it describes the proposal and its voting intention, cross-references that disclosure on the proxy card and adds an opt-out check box. | Less pressure to add a proponent’s proposal to the issuer’s own card, including in zero-slate campaigns, but the authority reaches only holders that do not withhold it. |
| Shareholder Opt-Out | No individual election; discretionary authority turns on the proponent’s solicitation. | A check box on the issuer’s proxy card that, if checked, would prevent the issuer from exercising discretionary authority. | Card design and tabulation choices, including holders that return both the issuer’s and proponent’s proxy cards, and disclosure explaining what checking the box does. |
Taken together, the proposals reflect the current SEC’s view that federal proxy regulation should focus on disclosure and the proxy solicitation process, while questions concerning shareholders’ substantive governance rights—including the right to have proposals included in an issuer’s proxy materials—should generally be left to state corporate law.
Link to Rule 14a-8 Would Give Way to State Law Rule 14a-8 Would Give Way to State Law
The proposed rescission of Rule 14a-8 does not eliminate the concept of shareholder proposals. Rather, it would remove the current federal framework for inclusion of shareholder proposals in issuers’ proxy materials and leave shareholders to navigate proposal submission options under state law (or other jurisdiction of organization) and, where state law permits, company-level governance (which, for the avoidance of doubt, co-exist with Rule 14a-8 today). In its proposing release, the SEC argued that Rule 14a-8 exceeds the Commission’s authority under Section 14(a) of the Exchange Act, which authorizes regulation of proxy solicitation procedures and disclosures, but not the underlying voting rights created by state law. The release noted that over the years, the Commission has increasingly assumed responsibility for defining and interpreting standards that implicate core state law concepts of corporate governance. As Chair Atkins stated, “This issue of corporate governance must be resolved by the state in which a company domiciles.”
Without a federal framework requiring inclusion in an issuer’s proxy materials, a proponent can only bring a proposal before a meeting by satisfying applicable state law requirements and the issuer’s advance notice provisions. To solicit votes from shareholders voting by proxy, the proponent would generally also need to prepare and distribute its own proxy statement and proxy card at its own expense, shifting to the proponent much of the solicitation cost now borne by the issuer.
As noted in the SEC’s proposing release, only one U.S. state (Texas) has enacted laws addressing shareholder proposals. The SEC observes, for example, that the Delaware General Corporation Law does not directly address whether nonbinding, or precatory, proposals, the most common type of Rule 14a-8 proposal, are a proper subject for shareholder action. With the exception of Texas, no other state has adopted such legislation since Rule 14a-8 was first adopted, and only a small number of Texas companies have opted into the 2025 Texas statute. Companies may also engage in private ordering today, to the extent state law permits, by adopting standards within their governing documents for when shareholder proposals may be presented. However, no companies have yet adopted such a framework, and the SEC attributes this reluctance in part to uncertainty over whether Rule 14a-8 preempts differing state law or privately ordered standards, and in part to concerns about investor criticism and adverse proxy advisor recommendations. The SEC accordingly recognizes that the transition to a state law-centered regime could involve uncertainty, as the existence of a federal rule has thus far inhibited the development of state law regimes and private ordering.
Link to How Rule 14a-4(c) Can Currently Pressure Issuers to Add Proposals How Rule 14a-4(c) Can Currently Pressure Issuers to Add Proposals
The SEC proposal also proposes amendments to Rule 14a-4(c), which is relevant (and could become more relevant with the rescission of Rule 14a-8) to proposals submitted outside of the Rule 14a-8 process. Rule 14a-4(c) addresses when a proxy may confer discretionary authority on the proxy holder. For a timely proposal submitted outside Rule 14a-8, current Rule 14a-4(c)(2) permits an issuer to exercise discretionary authority if it describes the proposal in its proxy statement and states how it intends to vote, unless the proponent provides notice to the issuer that the proponent intends to deliver a proxy statement as required under the rule. If the proponent satisfies the proxy disclosure and solicitation requirements, the issuer need not add the proposal to its own proxy card, but it may not use voting authority returned on that card to vote on the proposal. For an untimely proposal, Rule 14a-4(c)(1) generally permits discretionary authority if the issuer includes the required statement set forth in the rule in its proxy statement or form of proxy. Notice generally is timely if received by the deadline in an applicable advance notice bylaw or, absent such a provision, at least 45 days before the anniversary of the date on which the issuer first sent its proxy materials for the prior year’s annual meeting.
The SEC’s 2021 universal proxy rules increased the practical leverage of this route. Under the universal proxy rules, when conducting a proxy solicitation for a shareholder proposal, a proponent can include the issuer’s director nominees on its own proxy card without nominating competing directors. In such a scenario (referred to as a “zero-slate” campaign), the proponent’s proxy card can list the issuer’s director slate and management proposals alongside one or more shareholder proposals. If the issuer’s card omits the proponent’s shareholder proposals, shareholders seeking to vote on both the directors and the proposals may only use the proponent’s card. That dynamic can pressure an issuer to add the proponent’s proposals to its own proxy card.
Link to What the Proposed Rule 14a-4(c) Amendments Would Change What the Proposed Rule 14a-4(c) Amendments Would Change
The proposed amendment would no longer prohibit an issuer from exercising discretionary voting authority over a timely received shareholder proposal submitted outside Rule 14a-8 merely because the proponent satisfies the current rule’s notice, proxy disclosure and solicitation requirements. Under the proposed rules, an issuer could omit such a proposal from its proxy card and still exercise discretionary voting authority if it:
- includes in the proxy statement a brief description of the proposal and states how it intends to vote;
- cross-references that disclosure on the proxy card; and
- includes a check box on the issuer’s proxy card allowing the shareholder to withhold discretionary authority over the omitted proposal or proposals.
The proposed rule provides that the issuer’s brief description of the proponent’s proposal would remain at the issuer’s discretion and would not give a proponent the right to comment on it or to seek its revision. A brief description generally would suffice, so an issuer would not need to reproduce the full text of the proposal. That description would remain subject to Rule 14a-9, which prohibits materially false or misleading statements in proxy soliciting materials, so a description would still need to characterize the proposal accurately. Under the proposed rule, a single check box could cover all omitted non-management proposals; however, separate check boxes for each omitted proposal would also be permitted.
For example, an issuer could disclose that Proposal A will be presented and that it intends to vote against it. Its proxy card could cross-reference the disclosure and provide a check box that, if checked, prevents the issuer from voting the shareholder’s shares on Proposal A. If the shareholder returns the issuer’s card and leaves the box blank, the issuer could vote those shares against Proposal A pursuant to its discretionary authority as disclosed. If the shareholder checks the box, the issuer could not vote those shares on Proposal A. Checking the box would not itself cast a vote for or against Proposal A.
Under the proposed amendments, the issuer’s card could include only the issuer’s nominees and management proposals, while the proponent’s proxy card would include the issuer’s nominees, management’s proposals, and the proponent’s proposals. The proponent could still solicit, and shareholders could still use its card. The possibility of shareholders returning multiple proxy cards raises tabulation questions and potential conflicts between superseding instructions, on which the SEC has invited comment. The Rule 14a-4(c) amendments have independent justifications and could be adopted even if Rule 14a-8 is not rescinded.
Link to Other Proposed Amendments Other Proposed Amendments
The release proposes further amendments to implement the rescission of Rule 14a-8 and the Rule 14a-4(c) changes and to conform related rules and forms. Among other things, these proposed amendments would:
Link to What the Proposal Could Mean for Issuers What the Proposal Could Mean for Issuers
Independent solicitations could increase, but by how much is unclear. Some proponents that currently rely on Rule 14a-8 may run their own solicitations instead. Others, particularly those with fewer resources, may be deterred by the cost of doing so and by the proposed Rule 14a-4(c) changes.
Link to What Happens Next What Happens Next
The SEC’s proposing release, summarized in its fact sheet, will be open for public comment for 60 days following Federal Register publication, after which the SEC Staff will review comments and the SEC will decide whether, when, and in what form to adopt a final rule. The proposing release does not propose a specific effective date, compliance date or phase-in period. With 2027 shareholder proposal submissions already arriving, the timing of any final rule will be an important question for the coming season, and a legal challenge could push that timing back further.
Currently, Rule 14a-8 remains in effect, including the Rule 14a-8(j) notice requirement. Unless and until a final rule is adopted, or the SEC or Division of Corporation Finance announces otherwise, an issuer evaluating a proposal should continue to work through the Rule 14a-8 process as it currently stands, which our prior alert addresses in more detail.
The SEC released this proposal alongside its Proxy Solicitation Modernization proposal, which we address in a separate alert. Together, the proposals could materially reshape how public companies and shareholders navigate the proxy process.