Key Takeaways
- On September 16, 2026, the SEC proposed to rescind Rule 14a-8, the longstanding federal rule requiring companies to include qualifying shareholder proposals in their proxy materials, which would shift the legal framework for shareholder proposals from federal regulation to state corporate law, company charters, and bylaws.
- The SEC simultaneously proposed amendments to Rule 14a-4(c) that would expand a company’s ability to exercise discretionary voting authority over shareholder proposals not included in its proxy materials, while providing shareholders a mechanism to prevent such discretionary authority over their individual shares.
- For now, public companies should continue to comply with current Rule 14a-8 requirements while also reviewing their governing documents and applicable state law to assess how a state-law-focused shareholder proposal regime would affect their corporate governance practices if the proposed rules pass as proposed.
The Securities and Exchange Commission (the SEC or Commission) has taken a significant step toward fundamentally changing the federal shareholder proposal framework.
On September 16, the SEC proposed to rescind Rule 14a-8, the longstanding rule governing when companies must include shareholder proposals in their proxy materials. The Commission also proposed amendments to Rule 14a-4(c) that would expand the circumstances in which companies may exercise discretionary voting authority over certain shareholder proposals not included in their proxy materials.
What Led to the SEC’s September 16 Proposal to Rescind Rule 14a-8?
The proposal is the latest in a series of significant developments involving Rule 14a-8. As previously discussed, the Division of Corporation Finance announced in August that it would stop responding to Rule 14a-8 no-action requests. Then, in late August, the SEC sent a shareholder proposal rulemaking to the White House Office of Information and Regulatory Affairs (OIRA) under the requested title “Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals,” as reported here. The September 16 proposal now provides the details behind that earlier OIRA submission.
Unlike the recent procedural changes to the no-action process, the September 16 proposal goes to the continued existence of the federal shareholder proposal rule itself.
Would Rescinding Rule 14a-8 Shift Shareholder Proposal Rights to State Corporate Law?
Rule 14a-8 has long provided a federal mechanism through which eligible shareholders can require companies to include qualifying proposals in their proxy materials, subject to the rule’s procedural requirements and substantive bases for exclusion.
Under the SEC’s proposal, that federal framework would be eliminated. Instead, determinations regarding the role of shareholder proposals would generally be left to state law and companies’ governing documents, to the extent permitted under applicable state law. According to the Proposing Release, Rule 14a-8 exceeds the scope of the Commission’s statutory authority and intrudes into matters traditionally governed by state corporate law. The Commission also identified independent policy reasons for the proposed rescission, including its view that the existing federal regime may have discouraged states from developing their own approaches to shareholder proposals.
SEC Chairman Paul Atkins explained in his September 16 statement, that the proposal reflects, among other matters, a focus on avoiding federal securities regulation that improperly intrudes into state corporate law. Importantly, rescission of Rule 14a-8 would not itself prohibit shareholders from making proposals. Instead, the legal framework determining whether and how shareholder proposals reach a vote could shift substantially, potentially placing greater importance on the corporate law of a company’s state of incorporation and its charter and bylaws.
What Are the SEC’s Proposed Changes to Rule 14a-4(c) on Discretionary Voting Authority?
The SEC simultaneously proposed amendments to Rule 14a-4(c). Those amendments would broaden the circumstances in which a company could exercise discretionary voting authority over proposals that will be presented at a shareholder meeting but are not included in the company’s proxy materials. At the same time, shareholders would be given a means to prevent the company from exercising that discretionary authority with respect to their individual shares.
The Rule 14a-4 amendments are legally independent of the proposed Rule 14a-8 rescission. As the SEC’s fact sheet explains, however, the changes could become particularly relevant if Rule 14a-8 is rescinded and shareholder proponents increasingly pursue proposals outside the company’s proxy materials.
When Does the SEC’s Rule 14a-8 Comment Period Close, and What Should Companies Do Now?
For now, Rule 14a-8 remains in effect. The Commission has issued a proposed rule—not a final rule. The comment period will remain open through November 20, 2026, following publication of the proposal in the Federal Register on September 21, 2026.
Accordingly, companies preparing for the upcoming proxy season should continue to comply with Rule 14a-8 as it currently exists, including the procedural requirements applicable when a company intends to exclude a shareholder proposal. At the same time, public companies should begin considering what a more state-law-focused shareholder proposal regime could mean for their governance practices. Among other matters, companies may want to review applicable state law and their charter and bylaws to consider how those provisions would operate if Rule 14a-8 were no longer the primary framework for shareholder proposals.
The September 16 proposal represents the most consequential development yet in a rapidly changing Rule 14a-8 landscape. The immediate framework has not changed—but for the first time in decades, the SEC has formally proposed eliminating the federal shareholder proposal rule itself.
If you have any questions about how the proposed rules may impact your business, please contact the author or your relationship partner at Bass, Berry & Sims.
