For decades, companies and proponents have relied on the relatively straightforward and inexpensive no-action relief process for guidance from the Division on whether a shareholder proposal is excludable under Rule 14a-8 or whether the Division would recommend enforcement action, if excluded. In explaining this change, the Division cited a desire to focus resources on the review of Securities Act and Exchange Act filings, as well as the extensive body of Rule 14a-8 guidance from the SEC available to companies and proponents.
Recent changes in the no-action relief process
This decision is an important step toward the fundamental reassessment of Rule 14a-8 and the shareholder proposal framework for U.S. public companies that the SEC is undertaking under Chairman Paul Atkins, who in September 2025 and again in July 2026 released a rulemaking agenda that included a rule proposal entitled “Shareholder Proposal Modernization.” While the formal description of this rulemaking project is to “reduce compliance burdens for registrants and account for developments since the rule was last amended,” statements from the SEC and the leadership of the Division suggest that the SEC is considering a more fundamental change to Rule 14a-8, including eliminating Rule 14a-8 altogether.
In November 2025, the SEC announced an important shift in its approach to shareholder proposals and no-action relief.1 2 Citing workload constraints caused by the fall 2025 government shutdown and the resulting backlog of registration statement filings, the Division announced it would not respond to requests for no-action relief with respect to a proposed exclusion of a shareholder proposal submitted under Rule 14a-8. The Division did offer to consider requests seeking to exclude shareholder proposals on the basis that a shareholder proposal is improper under state law. The Division also offered to provide a response, without substantive review, to the required submission made by a company notifying the SEC that it was excluding a shareholder proposal under Rule 14a-8(j), if the company provided an “unqualified representation” that it had a reasonable basis to exclude the proposal. With the August 14 announcement, the Division has completely removed itself from the shareholder proposal process. It will no longer consider novel challenges asserting that a shareholder proposal is improper under state law3, and it will no longer provide a response to companies notifying the Division of their intent to exclude a shareholder proposal under Rule 14a-8(j).4
During the 2026 proxy season, shareholder proposals submitted to Russell 3000 companies declined by 12.9% compared to the 2025 season, continuing a downward trend in proposal submissions predating the Division’s November 2025 announcement5, with 63.9% of proposals advancing to a vote in 2026, as compared to 58.4% in 2025.6 Further, Rule 14a-8(j) exclusion notices filed by companies for the 2026 season were down by 53.7% compared to no-action requests submitted for the 2025 season.7 The data from the 2026 season shows that it does not appear that companies were overly aggressive in seeking to exclude shareholder proposals. We have observed that, without the Division “agreeing” with the reasons to exclude a shareholder proposal, many companies are reluctant to rely on a basis to exclude a shareholder proposal that is not supported by Division “precedent.”
Notably, proponents sued six different companies based on Rule 14a-8 proposal exclusions during the 2026 season. Three companies settled with the proponents, with two agreeing to include proposals in their proxy statements and a third agreeing to provide certain disclosure that had been the subject of the proposal.8 In two other cases, one proponent secured a preliminary injunction to include its proposal in the company’s proxy statement,9 while another proponent voluntarily dropped its lawsuit in response to the denial of preliminary injunctive relief.10 An additional case is still pending, though the proponent was denied preliminary injunctive relief.11 While litigation in the first year without the no-action letter process was reasonably limited, as noted above, one proponent was able to secure a preliminary injunction to include its proposal in the company’s proxy statement.12
Looking ahead
While no-action relief from the SEC is now unavailable, companies remain bound by Rule 14a-8 and the procedural and substantive bases for exclusion that it contains. Rule 14a-8 requires companies to explain their reasons for excluding a proposal in their Rule 14a-8(j) notice to the SEC, which must be submitted no later than 80 calendar days before the filing of their definitive proxy statements and must also be shared with the proponent. For the 2026 season, the Rule 14a-8(j) notice became the entire process rather than the accompaniment to a no-action request, and many companies included a thorough exclusion analysis in their 14a-8(j) notices that looked very much like a no-action letter. This new policy does not reduce the importance of documenting a company’s Rule 14a-8 exclusion analysis. In the absence of any kind of SEC review of companies’ arguments for excluding proposals, it is particularly critical for companies to continue to carefully and rigorously determine whether they have reasonable procedural or substantive grounds to exclude a given proposal based on Rule 14a-8, SEC staff guidance, prior no-action letter responses, which continue to retain precedential value, and court decisions. Companies can expect their Rule 14a-8 analysis to receive even greater scrutiny from serial shareholder proposal proponents, shareholder advocates, institutional investors, and proxy advisory firms in the 2027 proxy season.
While the changes to the shareholder proposal framework over the last 12 months seem unprecedented, we may only be at the beginning of a broader resetting of the relationship between shareholders and companies driven by the SEC’s continuing reexamination of the shareholder proposal process. For decades, shareholders have relied on the Rule 14a-8 process, rather than more aggressive tactics such as “vote no” campaigns, advance notice proposals, universal proxy, proxy contests, proxy access and litigation as a means to force engagement with companies. As the SEC appears open to potentially rescinding Rule 14a-8, the 2027 proxy season may see well-resourced proponents reminding companies that aggressive exclusion of shareholder proposals could invite proponents to introduce more intrusive tactics to the negotiating table. For the 2027 proxy season, we recommend that companies follow the same moderate approach as in the 2026 proxy season. No matter how the SEC’s reassessment of Rule 14a-8 ultimately plays out, companies can expect engagement with shareholder proponents, especially well-resourced ones, to become an even more frequent part of the shareholder proposal process for the foreseeable future.
Footnotes
1. Shareholder proposals are also a target of President Trump, who issued an executive order in December 2025 directing the SEC to review and consider revising or rescinding all rules, regulations and guidance relating to shareholder proposals, including Rule 14a-8. See “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisory Firms,” available at https://www.whitehouse.gov/presidential-actions/2025/12/protecting-american-investors-from-foreign-owned-and-politically-motivated-proxy-advisors/.
2. “Shareholder proposals: A surprise SEC announcement impacting the 2026 proxy season foreshadows sweeping changes to come,” A&O Shearman’s 2025 Corporate Governance and Executive Compensation Survey, available at https://www.aoshearman.com/en/insights/ao-shearman-releases-the-2025-corporate-governance-executive-compensation-survey.
3. The Division’s statement announcing the new change in policy noted that no Rule 14a-8(i)(1) no-action requests, which address whether a shareholder proposal is improper under state law, were received in the 2026 proxy season.
4. Companies will still be required to submit a Rule 14a-8(j) notice to the Commission. From an administrative perspective, companies should note that the Division stated that its shareholder proposal email address is no longer functional, and companies and proponents must submit these notices, any other correspondence or any questions through the SEC’s online Shareholder Proposal Form.
5. In February 2025, the Division issued Staff Legal Bulletin (SLB) No. 14M, which rescinded SLB No. 14L and reinstated the earlier, company-specific approach to the “economic relevance” exclusion under Rule 14a-8(i)(5) and the “ordinary business” exclusion under Rule 14a-8(i)(7), and reinstated prior staff guidance on micromanagement that SLB 14L had withdrawn, with the combined effect of broadening the bases on which companies could seek to exclude shareholder proposals.
6. “Governance Proposals Dominate the 2026 Proxy Season, ISS-Corporate,” available at https://www.iss-corporate.com/resources/blog/governance-proposals-dominate-the-2026-proxy-season/.
7. ESGAUGE.
8. See Stipulation of Settlement and Dismissal, New York City Employees’ Retirement System et al. v. AT&T Inc., Case No. 1:26-cv-01310 (S.D.N.Y. Feb 25, 2026); Joint Stipulation of Voluntary Dismissal, Masters v. PepsiCo, Inc., Case No. 7:26-cv-01432 (S.D.N.Y. April 8, 2026); Notice of Voluntary Dismissal, Nathan Cummings Foundation, Inc. v. Axon Enterprise, Inc., Case No. 1:26-cv-00501 (D.D.C. March 9, 2026).
9. See Stipulation and Order of Dismissal, DiNapoli v. BJ’s Wholesale Club Holdings, Inc., Case No. 1:26-cv-11075 (D. Mass. May 6, 2026).
10. See Fonds des Missions v. UnitedHealth Grp. Inc., 2026 WL 1018600 (D.D.C. April 15, 2026) (denying preliminary injunction); Notice of Dismissal, Fonds des Missions v. UnitedHealth Grp. Inc., Case 1:26-cv-00970 (D.D.C. April 28, 2026).
11. See As You Sow v. Chubb Ltd., 2026 WL 879666 (D.D.C. March 31, 2026) (denying preliminary injunction).
12. Additionally, in March 2026, the Interfaith Center on Corporate Responsibility and As You Sow, two active shareholder proposal proponents, filed a legal challenge under the Administrative Procedure Act against the SEC for the November 2025 policy change arguing that the policy itself is inconsistent with Rule 14a-8 and the SEC did not use formal notice and comment rulemaking to make this significant policy shift that is, in effect, a new rule changing the rights of shareholders and the Division’s responsibilities in the Rule 14a-8 process.
