On September 16, 2026, the Securities and Exchange Commission announced two sets of proposed changes to the federal proxy solicitation rules. The first proposal would rescind Rule 14a-8, which governs when companies must include shareholder proposals in their proxy materials, and amend Rule 14a-4(c), which addresses discretionary voting authority. The second proposal would modernize several mechanics of the proxy solicitation process.
SEC Chairman Paul Atkins described the proposals as advancing two priorities: ensuring that the SEC does not improperly intrude into state corporate law and updating SEC rules to reflect modern technology, market practice, and other innovations. The recission of Rule 14a-8 would be a particularly significant change. Rule 14a-8 has been part of the federal proxy framework for more than 80 years; rescinding it would move the center of gravity for shareholder proposals from a uniform federal process to state law and private ordering.
Eliminating the federal role in shareholder proposals
The first proposal would rescind Rule 14a-8 in its entirety. Companies would no longer be required under federal proxy rules to include shareholder proposals that satisfy federal eligibility and procedural requirements in their proxy materials. Instead, state law and each company’s charter, bylaws, and other governing documents would determine whether a proposal may be presented to shareholders at a meeting and the information required in a company’s annual meeting notice and proxy statement regarding a shareholder proposal.
The SEC’s primary legal rationale for rescinding Rule 14a-8 is that it exceeds the SEC’s authority under Section 14(a) of the Securities Exchange Act of 1934. In sharp contrast to the past 80 years of regulation, the proposing release exposes a view that Section 14(a) does not authorize the SEC to decide which matters are proper subjects for shareholder action under state law. The release also identifies policy reasons for rescission: The rule’s original justifications have not been substantiated and are less compelling today, particularly as technology has opened other channels for shareholder communication and engagement. The SEC notes that few proposals are supported by a majority of voting shareholders. Only 7% of proposals submitted for meetings held in 2025 were supported by a majority, and 11% of those proposals that went to a vote.
The SEC also points to unintended consequences. Rule 14a-8 has become a source of leverage in negotiations with companies, draws the SEC into state-law judgments, and may have inhibited the development of state law and private ordering. The SEC’s view is that retaining a modified version would be unlikely to avoid those problems because any federal framework would continue to shape the practical boundaries of shareholder voting rights.
The proposed amendments to Rule 14a-4(c) would address proxy voting mechanics for proposals received outside the Rule 14a-8 process. Under the current framework, if a shareholder complies with a company’s advance notice process for a proposal and solicits holders of the minimum number of shares required to pass the proposal in compliance with the proxy rules, the company is not permitted to exercise discretionary voting authority on the proposal. The release notes that this structure may incentivize companies to include a non-Rule 14a-8 proposal in the proxy statement to preserve the ability to solicit votes. By contrast, under the proposed framework, a company could seek authority to exercise discretionary voting authority over a shareholder proposal properly presented at an annual meeting even if the proponent had solicited votes through its own proxy materials. The company would need to include a brief description of the proposal in its proxy statement, disclose how it intends to vote proxies with discretionary authority, and include a check box on the proxy card allowing each shareholder to opt out of the company’s discretionary authority over that shareholder’s shares.
What this means for companies
- Potential decrease in volume of shareholder proposals. The most immediate benefit for companies if Rule 14a-8 is rescinded is an expected decrease in the number of shareholder proposals submitted due to increased costs for shareholders submitting a proposal that would not be included in the company’s proxy statement. Without the automatic distribution provided by inclusion in the company’s proxy statement, shareholder proponents would need to bear the cost of soliciting proxies in favor of their proposals.
Today, there is little cost to submit a shareholder proposal, meaning there is little disincentive to submitting even those proposals that receive minimal support from other shareholders. A shareholder with as little as $2,000 of shares may be eligible to submit a proposal. Proponents might invest their own time (and the time of their own counsel) to ensure their proposals meet the current requirements of Rule 14a-8 but have no printing or distribution costs.
On the other hand, companies face costs in addressing shareholder proposals for legal advice and time, effort, and distraction from employees and management, all of which can be significant. The SEC estimates that addressing and including a Rule 14a-8 proposal currently costs approximately $20,000 to $150,000 or more per proposal. A significant decrease in the number of proposals would be a welcome change for many public companies.
- Proposals under state law will continue to create work for public companies. Without Rule 14a-8, companies would still need to assess proposals that are properly raised under applicable state law or the company’s governing documents, determine whether a proposal may be placed on the meeting agenda and brought to a vote, and decide how to respond. In the near term, those questions may require more reliance on state law, governing documents, and litigation risk than on a familiar federal exclusion framework.
- Private ordering on the horizon—proxy access. If Rule 14a-8 is rescinded, investors may pressure companies to implement eligibility requirements, limits on the number and types of shareholder proposals, notice and procedural requirements, and other qualifications for shareholder proposals to be included in a company’s proxy statement—similar to the protections that Rule 14a-8 previously supplied.
As an initial step in private ordering, we may see a surge in shareholder proposals in the upcoming proxy season calling on companies to implement protections nearly identical to Rule 14a-8 in their bylaws or other governing documents. Most companies do not currently have bylaws or other governance policies addressing the inclusion of shareholder proposals in the company’s proxy statement. In light of the SEC’s rescission proposal, shareholder proponents facing the prospect of losing the ability to submit low-cost proposals for inclusion in the proxy statement may act quickly with such proposals this year. Early examples of such proposals are already available.
As of now, it is hard to know how such proposals will fare. We will see over the course of the proxy season how institutional investors and proxy advisory firms develop their views and guidelines on whether to support these proposals. Over time, we may see development of market standards for company-implemented restrictions, similar to the private ordering process that took place for director nominee proxy access bylaws a decade ago.
- Private ordering on the horizon—state law and case law. Because Rule 14a-8 and its predecessors have operated for decades, there is little express state corporate law or case law establishing what constitutes a proper subject for shareholder action. If Rule 14a-8 is rescinded, it may lead to state corporate law changes addressing what is proper subject matter for shareholder action and the propriety of bylaw provisions regarding proposals. We might also expect years of litigation over various aspects of state laws and company bylaws regarding shareholder proposals.
- Proxy card changes. The proposed Rule 14a-4(c) amendment would give companies a new option to preserve voting authority in situations where a shareholder proposal is not included in the proxy statement but is expected to be properly raised at the annual meeting. Under the current rule, a company may not use discretionary voting authority if the proponent undertakes a proxy solicitation campaign meeting certain minimum requirements. As proposed, a company would be permitted to seek discretionary voting authority with respect to an omitted proposal, subject to compliance with limited disclosure requirements and the ability for shareholders to withhold that discretionary authority.
Proxy solicitation modernization
The SEC’s second proposal is largely administrative housekeeping. It would update rules that were designed for a more paper-based proxy system and reduce duplicative disclosure and timing requirements. The four changes most relevant to public companies are:
- Elimination of the annual report requirement. Eliminate the requirement to deliver an annual report to security holders with proxy materials. A Form 10-K filed on EDGAR would satisfy the obligation, eliminating redundant disclosure for most companies and eliminating the requirement for a stock performance graph.
- Elimination of the proxy statement deadline when incorporating by reference. Eliminate the 20-business-day delivery deadline when documents are incorporated by reference into a proxy statement. The SEC views EDGAR availability and electronic delivery as functional substitutes for the older delivery requirement.
- Elimination of notices of exempt solicitation. Eliminate both the requirement and the ability to submit Notices of Exempt Solicitation on EDGAR. The SEC believes these notices create investor confusion rather than serving the original purpose.
- Shortened broker search period. Shorten the minimum broker search period from 20 business days to five business days. The SEC notes broker searches can now often be completed within three days because of electronic processes and proxy-service providers.
Taken together, these changes would reduce routine compliance work and better reflect how investors and companies now access and exchange proxy information. The broker-search change may be especially useful in transactions where the current 20-business-day period creates avoidable costs and delay, although companies will need to coordinate with intermediaries and consider the shorter period’s effect on share recalls and proxy administration.
What comes next
Both proposals are subject to a 60-day public comment period beginning after publication of the applicable release in the Federal Register. The SEC will need to review the comments and adopt final rules before any changes take effect, and litigation may also delay rule changes. The proposals are not expected to change the rules applicable to the upcoming proxy season.
In the meantime, companies should begin evaluating their governing documents such as bylaws and advance-notice provisions, monitor state legislative and judicial developments, and assess how a reduced federal role could affect shareholder engagement strategies.
