SEC Proposes to Rescind Rule 14a-8, Modernize Proxy Rules

Background

On September 16, 2026, the U.S. Securities and Exchange Commission (the “SEC”) issued two rule proposals addressing the shareholder proposal process and broader proxy solicitation framework. The proposals, if adopted, would represent a major change to the federal proxy voting system, with the SEC removing itself altogether from the shareholder proposal process.

Under the first proposal, the SEC would rescind Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), the federal rule governing when a company must include a shareholder proposal in its proxy statement, the bases on which a company may exclude such proposals, and the process for doing so (the “Proposed Rescission”). The Proposed Rescission is the latest step in the SEC’s broader retreat from the shareholder proposal process, following the Division of Corporation Finance’s announcement in August 2026 that the SEC would stop responding to companies’ no-action requests to exclude shareholder proposals. The SEC also proposed amendments to Rule 14a-4(c) of the Exchange Act that would expand a company’s ability to exercise discretionary voting authority over proposals submitted outside the Rule 14a-8 process.

In the second proposal, the SEC proposed amendments to the federal proxy rules in order to modernize various aspects of proxy solicitation mechanics to better suit modern-day communication and technology.

Both rule proposals are now open for public comment, with their respective comment periods remaining open until November 20, 2026. Given the rulemaking process ahead, we would expect any final rules governing shareholder proposals and proxy solicitation not to take effect until after the 2026-2027 proxy season.

Rule 14a-8 Rescission

Under the Proposed Rescission, a company’s obligation to include a shareholder proposal in its proxy statement would no longer turn on satisfying a set of federal procedural and substantive tests under Rule 14a-8. The shareholder proposal process would instead be governed entirely by the state corporate law regime and the company’s own governing documents.  The Proposed Rescission would apply to all public companies, including registered investment companies and business development companies; the SEC acknowledged unique considerations for such companies (including Investment Company Act voting rights and the challenges of soliciting diffuse, retail-oriented shareholders) and requested comment on alternative approaches for them.

In support of the Proposed Rescission, the SEC in the proposing release argues primarily that Rule 14a-8 exceeded its statutory authority. The SEC explains that Rule 14a-8 was initially adopted in 1942 as a procedural tool, pursuant to Section 14(a) of the Exchange Act, meant only to facilitate shareholders’ voting rights under state law. Pointing to a long history of subsequent amendments broadening its scope, the SEC explains that the rule outgrew that ‘facilitation’ purpose and now effectively decides which matters shareholders may bring to a vote in the first place—a substantive question of corporate governance rather than a question of solicitation mechanics. Because Section 14(a) authorizes the SEC to regulate how a proxy solicitation is conducted, not what shareholders are entitled to vote on, the SEC contends that Rule 14a-8 has strayed beyond its statutory authority and now impermissibly intrudes on state law.

The SEC also makes various policy arguments to justify rescinding the rule outright rather than narrowing it. For example, the SEC highlights the unintended consequences of Rule 14a-8, noting that a relatively small group of repeat proponents account for a large share of the proposals filed each year and suggesting that the rule has shaped companies’ corporate governance practices and decision-making in ways not initially intended. The SEC further notes that most states have not developed their own legal frameworks for shareholder proposals, a gap it attributes in part to Rule 14a-8’s dominance, and expresses hope that rescission will prompt states to fill that void over time.

Overall, the Proposed Rescission may give companies an opportunity to engage directly with stakeholders on what an appropriate proposal framework should look like, rather than defaulting to the one Rule 14a-8 previously imposed.

Amendments to Rule 14a-4(c)(2)

Apart from the shareholder proposal inclusion question governed by Rule 14a-8, a shareholder can always take a proposal outside that process entirely by submitting it in compliance with the company’s advance notice bylaws and soliciting proxies on its own. Rule 14a-4(c) determines whether the company, in turn, may vote the proxies it receives against a proposal that never made it onto the company’s own card.

Today, a company generally keeps that discretionary authority for a non-Rule 14a-8 proposal as long as it discloses the proposal and how it plans to vote, but loses it the moment the proponent notifies the company of, and follows through on, its own solicitation reaching the percentage of shares needed to pass the proposal. In practice, this exposes companies to what has become known as a “zero slate” tactic: a proponent bypasses Rule 14a-8 altogether, files its own proxy card featuring only the company’s own director nominees alongside its proposal, and solicits just enough votes to strip the company of discretion, exploiting the “bona fide nominee” rule adopted alongside the 2021 universal proxy rules to make its card attractive to shareholders who want to vote for the company’s nominees.

The SEC’s proposed fix is to remove that solicitation threshold altogether, so a company could exercise discretionary voting authority over a timely, non-Rule 14a-8 proposal no matter how many shares the proponent solicits. As a check on that added discretion, the proposed rule would require the company to describe the proposal in its proxy statement and give each shareholder a check-the-box option to withhold discretionary authority over their own shares. The SEC frames this change as standing on its own, separate from the Rule 14a-8 Proposed Rescission, on the view that companies should not have to add a proposal to their own proxy card simply to avoid losing their vote on it.

Modernization of the Proxy Solicitation Process

In the second, separate proposing release, the SEC proposed several updates to Schedule 14A (and the corresponding provisions of Schedule 14C) intended to modernize proxy mechanics. The proposed amendments would:

• Eliminate the requirement that companies deliver a separate annual report to security holders when a Form 10-K is already on file, as well as the related stock performance graph requirement for most registrants;
• Remove the 20-business-day delivery deadline for proxy statements that incorporate other documents by reference;
• Rescind the requirement to file a Notice of Exempt Solicitation;
• Shorten the minimum broker search period from 20 business days to five business days;
• Require proxy and information statement cover pages to list contact information for a company representative; and
• Make related conforming changes, including to when a preliminary proxy filing is triggered and to the Rule 14a-5 deadlines for disclosing shareholder proposal and nomination procedures, to reflect the elimination of Rule 14a-8.

Takeaways

• State law and companies’ governing documents will take on primary importance. Companies should review their advance notice bylaws now in anticipation of the rescission of Rule 14a-8. If Rule 14a-8 is rescinded, the determination as to whether a company must include a shareholder proposal in its proxy materials will depend on state law and on the company’s own charter and bylaws, rather than on a uniform federal standard. Boards and management should begin assessing how their state of incorporation, charter, and bylaws would treat a shareholder proposal in the absence of Rule 14a-8, well before any final rule takes effect, and should review their advance notice bylaws now to determine whether they require amendments.
• Companies may see a period of uncertainty and an inconsistent statutory framework. Because many state corporate statutes are silent or ambiguous on questions such as whether precatory proposals are a proper subject for shareholder action, companies may need to make inclusion and exclusion decisions without settled legal guardrails for some time, and that uncertainty may persist through multiple proxy seasons. Courts in the company’s state of incorporation may need to resolve foundational questions, such as whether shareholders retain an inherent common law right to bring non-binding proposals, before market practice stabilizes.
• Companies should not expect relief for the upcoming proxy season. Given the likelihood of legal challenges to the rule proposals, companies should plan to conduct their 2026-2027 proxy season under the current rules and treat any rescission as a multi-year transition rather than an immediate change. Companies should continue to comply with Rule 14a-8’s existing procedural and substantive requirements, including deadlines for responding to shareholder proposals, until a final rule is adopted and becomes effective.
• Companies should monitor state legislative, judicial and stock exchange developments closely. Because the proposed rescission is designed to push these questions to the states, companies should track legislative activity in their state of incorporation as well as judicial decisions addressing shareholders’ inherent rights to bring proposals.
  
  For instance, in Delaware, whether shareholders hold an inherent right to bring precatory proposals remains unsettled, and the answer will likely depend on developments in the legislature and the courts rather than on the rescission of Rule 14a-8 alone. Notably, the Council of the Corporation Law Section of the Delaware State Bar Association has stated that it is incorporating the potential rescission of Rule 14a-8 into its annual review of Delaware’s corporate statutes, from which it may formulate proposed statutory amendments for recommendation to the Delaware General Assembly.
  
  Texas, furthermore, has enacted an opt-in statute that lets eligible companies impose minimum ownership, holding-period, and solicitation thresholds on shareholders seeking to bring a matter to a vote, and Texas could implement further refinements to this statute if Rule 14a-8 is rescinded. Nevada, by contrast, has yet to legislate on precatory proposals, leaving open the question of whether its legislature will adopt similarly board-friendly rules.
  
  Finally, companies should watch for related rule changes from stock exchanges such as the New York Stock Exchange and Nasdaq, which may look to supplement their own listing standards on shareholder proposals. Proxy advisory firms, such as Glass Lewis and ISS, may also update their voting guidance on shareholder proposals in response to these developments.
  
• Shareholder activism will continue through other channels. Even if Rule 14a-8 is rescinded, shareholders will retain other avenues to press governance demands, including voting in director elections and on management proposals, informal engagement with management, exempt solicitations under Rule 14a-2(b)(1), calling special meetings or acting by written consent where permitted, nominating directors (including through proxy access bylaws), submitting floor proposals under a company’s advance notice bylaws, and public pressure through social media or divestment threats. Because the modernization proposal would also eliminate the Notice of Exempt Solicitation with no replacement EDGAR mechanism, companies will need to more closely monitor press releases and third-party platforms to detect “vote no” or “withhold” campaigns.