SEC Proposes to Rescind Rule 14a-8: What Companies Need to Know

The End of Federal Shareholder Proposal Regulation

The SEC's proposed rulemaking would fully rescind Rule 14a-8, which has for decades required companies to include qualifying shareholder proposals in their proxy statements. The proposal reflects the SEC's view that Rule 14a-8 exceeds the Commission's statutory authority under Section 14(a) of the Exchange Act. Chairman Atkins stated that, absent authorization from Congress—which Congress has not granted for shareholder proposals—the Commission has no authority to determine which matters are a "proper subject" for a shareholder vote.

The proposal follows the SEC's step-by-step withdrawal from the shareholder proposal process:

• In November 2025, the Division of Corporation Finance announced it would no longer provide substantive no-action review;
• In August 2026, the Division announced it would no longer respond to companies' no-action or no-objection requests at all; and
• Now, the SEC has proposed eliminating the rule entirely.

The proposal would not eliminate the concept of shareholder proposals but rather recognize that this issue of corporate governance must be resolved by each company's state of domicile.

State-Level Implications: A New Patchwork

Without a federal framework, there will be no uniform set of substantive and procedural guidelines to govern proposal ownership thresholds, submission deadlines, or proposal limitations. That is where the SEC hopes that the states will step in. Chairman Atkins framed this as an exciting opportunity for states to compete to attract companies by implementing sensible shareholder proposal frameworks.

For example, Texas has already moved in this direction, establishing an "opt-in" ownership threshold of $1 million or 3% share ownership for shareholders to be eligible to submit proposals to companies that are either headquartered in Texas or listed on a Texas stock exchange. The proposed rescission should provide states with both the legal clarity and the motivation to implement their own shareholder proposal frameworks, and we expect states to take varying approaches, creating a patchwork that companies and proponents will need to navigate.

The timing of Rule 14a-8's rescission and any interventions at the state level are uncertain, and there is no guarantee there will be a smooth and simultaneous transition. Any resulting "gap" in regulation will especially cause uncertainty for companies, and this "gap" may be exacerbated if and when the SEC's rulemaking is challenged in court and if states fail to act. We anticipate that the landscape will remain uncertain for the foreseeable future, and companies should closely monitor both legislative developments in their states of incorporation and litigation at the federal level.

Bylaw Considerations: Building Your Own Guardrails

In the absence of a federal framework and state legislation, company bylaws will become the primary source of procedural requirements for shareholder proposals. Typical advance notice bylaws do not include the guardrails that Rule 14a-8 provides—such as ownership thresholds, limitations on the number of proposals, or relevance and resubmission standards. Without those guardrails, a holder of a single share could theoretically submit an unlimited number of proposals.

As clarity emerges on the timing of the transition from the federal framework to state regulation, companies should consider whether and how they may need to amend their bylaws to add substantive and procedural requirements similar to those of Rule 14a-8, such as minimum ownership thresholds, limits on the number of proposals per shareholder, and a requirement that proposals relate to a proper subject for shareholder action under state law. Companies should work with their legal advisors to ensure that any bylaw amendments are consistent with applicable state law and appropriately tailored to the company's governance framework. First movers on bylaw amendments may also need to brace for litigation as long as the landscape remains uncertain.

Closing the Rule 14a-4 Loophole

The proposed amendments to Rule 14a-4(c) would provide companies with discretionary proxy voting authority to vote on matters presented at shareholder meetings but not included on the company's proxy card. Currently, companies have this discretionary authority with respect to timely received proposals only if the shareholder proponent does not solicit a requisite percentage of shares. The amendments would simultaneously provide shareholders with the ability to elect to prevent the company from exercising discretionary authority with respect to their individual shares. These amendments would address the growing use of proposals outside Rule 14a-8, including the submission of multiple shareholder proposals through advance notice bylaws followed by proxy solicitation under Rule 14a-4. These proposals are sometimes referred to as "zero slate" proposals, as they typically are submitted without nominations of director candidates.

The risks of this approach were demonstrated in 2024, when the AFL-CIO and the United Mine Workers of America submitted five proposals to Warrior Met Coal pursuant to the company's advance notice bylaw, reportedly spending just $15,000 in proxy solicitation costs. More recently, in 2026, a shareholder activist threatened to submit multiple proposals under BJ's Wholesale's advance notice bylaws and solicit proxies via Rule 14a-4 if its Rule 14a-8 proposal was excluded. Although the proposed Rule 14a-4 amendments are independent of the proposed rescission of Rule 14a-8, their proposal shows the SEC recognizes that, if Rule 14a-8 is rescinded, shareholders may be more likely to file their own proxy materials with their proposals, making these amendments a necessary recalibration.

Modernizing the Proxy Solicitation Framework

In a separate proposing release, the Commission also proposed amendments to four proxy solicitation rules to reflect technological advancements and changes in shareholder communications. Key changes include: (i) elimination of the requirement to deliver a separate annual report, including a stock performance graph, to security holders if a Form 10-K is already on file; (ii) elimination of the 20-business-day waiting period for proxy statements incorporating information by reference; (iii) elimination of the requirement in Rule 14a-6(g) for large shareholders to submit Notices of Exempt Solicitation on EDGAR; and (iv) reduction of the broker search period from 20 to 5 business days.

Preparing for the Upcoming Proxy Seasons

The changes in the SEC's Rule 14a-8 approach in the past year have been fast-paced, but this last step to dismantle the rule will take several months. At this moment, we anticipate that Rule 14a-8 may still be in place for the 2027 proxy season, at least for calendar year-end companies with Fall/Winter Rule 14a-8 deadlines. Nevertheless, companies should begin preparing now for a dramatically different shareholder proposal landscape.

1. Understand whether and how a shareholder could submit a proposal under your current bylaws. Review advance notice bylaw provisions to identify vulnerabilities and assess whether existing substantive and procedural requirements are adequate in the absence of Rule 14a-8.
2. Prepare your board for a season of uncertainty. The regulatory landscape is shifting rapidly on the federal side, but the timing and impact of any state regulation is uncertain. Prepare for a "regulation gap" and anticipate the implications―and the uncertainty.
3. Understand what is allowed under applicable state law. States take different approaches to shareholder proposals, and changes to state-level regulation are expected in light of the changing federal framework. Companies need to understand their specific legal landscape, including whether state law provides an inherent right to submit non-binding proposals.
4. Understand how a proponent could challenge an exclusion in court. Without SEC involvement, litigation remains the likely way that shareholders will object to proposal exclusions. During the 2026 proxy season, six shareholder proponents sued to challenge exclusion determinations, and that number could increase following the SEC's August 2026 announcement and in a post-Rule 14a-8 environment.
5. Consider how bylaws may need to change. Evaluate the feasibility and appetite for bylaw amendments that supplement or replace Rule 14a-8's guardrails in the absence of a federal and state framework, and monitor proxy advisor and institutional investor policy changes that may inform those decisions.