SEC Proposes to Rescind Shareholder Proposal Rule and Modernize Proxy Solicitation

On September 16, 2026, the Securities and Exchange Commission (SEC) issued a highly anticipated proposed rule to rescind Rule 14a-8’s federal regulation of shareholder proposals and amend Rule 14a-4 governing discretionary voting authority, and a related proposed rule to modernize certain rules related to proxy solicitation. If adopted as proposed, those amendments primarily would:

• Shift regulation of shareholder proposals primarily to state law and the governing documents of the company; 
• Make it easier for a company to obtain discretionary authority to vote on shareholder proposals; and
• Simplify certain elements of the annual reporting and proxy solicitation process, including reducing broker search periods and eliminating the need to file a “glossy” or Form 10-K wrap.

Proposal to Reduce Federal Regulation of Shareholder Proposals

Over the past year, the Division of Corporation Finance has progressively reduced its involvement in Rule 14a-8 no-action requests, culminating in the announcement last month that it will no longer respond to any Rule 14a-8 no-action requests or issue “no-objection” letters. These developments, coupled with recent comments by Chair Paul Atkins, indicated that significant change was ahead for the shareholder proposal process. 

The SEC now proposes to rescind Rule 14a-8 in its entirety because the rule exceeds the SEC’s statutory authority by “improperly intruding into state law without express authorization from Congress.” The SEC also cited several policy reasons to support the approach, including that: 

1. Factors supporting the adoption of Rule 14a-8 either have not been substantiated in practice or are less compelling today; 
2. The rule has had, and will continue to have, unintended consequences; and 
3. Retaining the rule is unlikely to avoid those consequences. 

Proposal to Give Companies Greater Flexibility to Obtain Discretionary Voting Authority

Given that any rescission of Rule 14a-8 would likely result in more companies receiving shareholder proposals pursuant to their respective governing documents, the SEC also proposed related amendments to Rule 14a-4(c) to make is easier for a company to obtain discretionary voting authority – the power to vote on behalf of a shareholder with respect to a matter that is not included on the proxy card. 

Under the current version of that rule, companies may not exercise discretionary voting authority on a particular proposal if the proponent: 

• Timely notifies the company that it intends to deliver proxy materials to at least the percentage of the company’s voting shares needed to carry the proposal; 
• Includes the same statement in its own proxy materials; and 
• Provides evidence to the company that it has in fact solicited the holders of at least the percentage of voting shares needed to carry the proposal.

Whereas the current version of Rule 14a-4(c) has caused companies to feel compelled to include shareholder proposals received outside of Rule 14a-8 on their proxy cards, the SEC’s proposed rule would provide companies with greater flexibility to seek and obtain discretionary voting authority – and shareholders with greater agency –  regarding such proposals. Specifically, the proposed amendment to Rule 14a-4(c) would no longer prohibit a company from exercising discretionary authority with respect to a timely non-Rule 14a-8 proposal, regardless of whether the shareholder proponent delivers its own proxy materials to holders of the requisite percentage of the company’s shares needed to carry the proposal. 

In order to exercise discretionary voting authority with respect to such a shareholder proposal, a company would need to include: (1) in its proxy statement, a brief description of the matter and how the company intends to exercise its discretion to vote on the matter; and (2) on its proxy card, a cross-reference to the location of such description in the proxy statement and a check box by which a shareholder may elect not to confer discretionary voting authority on the matter. These amendments to Rule 14a-4(c) would be consistent with the spirit of the rescission of Rule 14a-8: to leave decisions about the appropriate role of shareholder proposals to states and companies. 

Proposals to Simplify Annual Reporting and Proxy Solicitation

The proposal to modernize the proxy solicitation rules would, among other things: 

1. Eliminate the requirement that a company deliver a Rule 14a-3(b) annual report to shareholders if the company has filed in its Annual Report on Form 10-K for the most recently completed fiscal year; 
2. Rescind the Rule 14a-6(g) requirement to file a Notice of Exempt Solicitation when conducting certain written exempt solicitations; and 
3. Consistent with other recent Staff guidance on the topic, shorten the minimum broker search period from 20 business days to five business days. 

Next Steps

Comments on the proposed rules are due on or before November 20, 2026. Although the proposals could materially reshape the shareholder proposal process if adopted, companies will continue to face uncertainty during the upcoming proxy season, particularly because the Staff has discontinued its practice of providing Rule 14a-8 no-action responses and “no-objection” letters. The proposed rule to rescind Rule 14a-8 underscores the importance of state law in making determinations in the shareholder proposal process, but simultaneously recognizes that the General Corporation Law of the State of Delaware (like the Model Business Corporation Act) does not directly address the question as to whether precatory proposals are proper subjects for a shareholder vote (and even if Delaware law were clear on the issue, other states could take a different position). States may respond to the current uncertainty by adopting legislation on the topic (whether specific rules and/or limitations or enabling statutes) or simply deferring to private ordering. 

If you have any questions regarding the SEC’s proposed rules, please contact any member of our Public Company Advisors Team or the Womble Bond Dickinson attorneys with whom you usually work.