SEC Moves to Rescind Rule 14a-8, Amend Rule 14a-4, and Modernize Various Proxy Solicitation Rules

The SEC announced proposals that, if adopted, would shift regulation of shareholder proposals from the SEC, which has long held the role of referee in the process, towards state law and companies’ governing documents, and would significantly alter the proxy season landscape.

On September 16, 2026, the Division of Corporation Finance (the “Division”) issued two proposing releases to (1) rescind Rule 14a-8 and amend Rule 14a-4(c) under the Securities Exchange Act of 1934 (the “Exchange Act”) and (2) update various proxy solicitation rules to reflect technological advancements and changes to shareholder communications.

Specifically, the SEC proposes to eliminate Rule 14a-8 and references to it in various SEC rules and forms entirely. In its release, the SEC notes that “leav[ing] determinations about the role of shareholder proposals to State law and company governing documents” is appropriate because Rule 14a-8 “exceeds the [SEC’s] statutory authority.”

The SEC also proposed amending Rule 14a-4(c)’s discretionary authority scope, in part anticipating that shareholders will increasingly submit proposals outside the Rule 14a-8 process. Currently, companies have limited discretionary authority to decide how to handle proposals that are first raised at a shareholder meeting outside of the proxy materials if they meet the requirements of Rule 14a-(c). The Rule 14a-4(c) amendment proposal would expand the circumstances under which an issuer may exercise discretionary authority over proxies received with respect to proposals not included in proxy materials and presented for a vote at a meeting.

The SEC has also proposed several changes intended to modernize proxy solicitations that, if adopted, would eliminate the requirement for companies to deliver annual reports to shareholders if they already filed a Form 10-K, remove the 20-business day requirement for incorporation by reference, reduce broker search periods from 20 to five business days, and eliminate the requirement in Rule 14a-6(g) for certain shareholders to submit notices of exempt solicitations (which would in turn eliminate the ability to voluntarily make such SEC notice filings).

Background

Rule 14a-8, and its predecessor, has served for well over half a century as the framework governing the right of shareholders under Federal law to seek to include proposals in public companies’ proxy statements. Before the predecessor to Rule 14a-8 was first enacted, state laws largely allowed shareholders to introduce certain proposals at shareholder meetings, but whether companies needed to disclose such proposals in their materials, unrelated to the matters for which they sought proxy authority, was unclear. The SEC therefore adopted Rule 14a-8’s predecessor in 1942, Rule X-14-7, which required inclusion in proxy materials of any shareholder proposal for which the issuer was given reasonable notice and that involved a “proper subject” for shareholder action. The SEC went on to amend the rule to clarify what issues were “proper subjects” for shareholder action. Out of this framework arose the longstanding practice whereby companies historically would file their reasoning for excluding proposals with the SEC, in the form of “no-action” requests, with the SEC typically responding in agreement or disagreement. This practice expanded the SEC’s role in refereeing which shareholder proposals were deemed includable or excludable in companies’ proxy materials. Over the ensuing decades, the SEC continued to amend the rule to span over 3,000 words and include a host of procedural and substantive limitations. In the SEC’s words from the September 16 adopting release, through this rulemaking progression, “the [SEC] has increasingly assumed responsibility for defining and interpreting standards that implicate core State law concepts of corporate governance.”

Over the past several decades, the submission of shareholder proposals has continued to steadily increase, with more than 1,000 proposals filed in 2024, and the subject matter of such proposals has expanded from traditional governance topics to encompass broader subjects, such as environmental and social matters. With the increased prominence of proposals during proxy seasons and range of the topics addressed therein has come increased cost and attention from boards and management on such matters, and conflicting attitudes from shareholders (including large institutional investors), issuers, and regulators alike as to the value of such proposals. These proposals, some of which have been quite polarizing, have also helped drive media attention and broader awareness from the general public.

The SEC’s approach to regulating shareholder proposals has likewise shifted over the years, with presidential administration and SEC composition changes over the past decade leading to marked swings in guidance, significantly varying the ease with which companies could predict how the SEC might view excludability of certain types of proposals in recent years. In a significant development, the Division announced in November 2025 that, subject to certain exceptions,¹ it would not respond to requests to exclude Rule 14a-8 shareholder proposals for the 2025–26 proxy season. The reduction in SEC oversight over shareholder proposals resulted in companies being less likely to exclude shareholder proposals from their proxy statements and increased litigation challenging the exclusions that did occur. Beyond individual shareholder suits, an Administrative Procedure Act lawsuit was also filed to challenge the Division’s move to suspend the no-action practice, which remains ongoing. Further, on August 14, 2026, the Division announced that it would remove itself entirely from the Rule 14a-8 process.

Rescission of Rule 14a-8

The rescission of Rule 14a-8, if approved, would not eliminate the ability of shareholders to submit proposals — it would only remove the Federal right to do so. As a result, the regulation of shareholder proposals would shift entirely to states and, in some cases, companies themselves. Laws recognizing rights to introduce proposals at shareholder meetings are still on the books in most states; however, given the historic role of Rule 14a-8 in these matters, many such laws are underdeveloped and unutilized by proponents. The SEC notes in the proposing release that the presence of Rule 14a-8 “has inhibited the development of State law and private ordering.” For example, Delaware, the most popular legal domicile for public companies in the United States, has limited case law on shareholder proposals (and their proper or improper exclusion), and it is currently unclear under Delaware law whether precatory (i.e., non-binding) proposals, the most common type of Rule 14a-8 proposal, are a proper matter for shareholder vote. Accordingly, in many states the scope of permissible proposals could be, in the words of Commissioner Uyeda, “significantly broadened” if neither state law nor company governing documents place any restrictions on what may be submitted for a shareholder vote. 

Nevertheless, there have been state-level efforts to regulate shareholder proposals, with Texas recently adopting Texas Business Organizations Code Section 21.373, which allows certain public companies headquartered in Texas or listed on a Texas stock exchange to limit the ability of shareholders to submit proposals (other than director nominations) to shareholder(s) that have continuously owned at least $1 million in voting shares or 3 percent of the company’s voting stock for at least six months prior to the shareholder meeting and have formally solicited holders of 67 percent of the voting power entitled to vote on the proposal. If Rule 14a-8 is rescinded as proposed, more states may pass similar legislation, potentially spurred by the recent increased competition among certain states for corporate domicile.

In accordance with, or in the absence of, state law, companies may also select varying approaches to regulating shareholder proposals in their governing documents. For instance, today, approximately 83 percent of S&P 500 companies voluntarily include proxy access provisions in their governing documents. Given the importance ascribed to the shareholder proposal mechanism by many institutional investors and proxy advisors, as evidenced by certain rulemaking petitions received by the SEC requesting to retain Rule 14a-8, it is conceivable that companies would be inclined to adopt or retain access provisions in their governing documents. That being said, such provisions would still likely reflect variation, as companies may negotiate differing levels of accessibility and approaches could further evolve over time (e.g., with respect to ownership requirements, holding periods, limits on the ability of shareholders to work together and the number of proposals that may be submitted by a particular shareholder or group).

If Rule 14a-8 is rescinded, the shareholder proposal regulation landscape could become bumpy and inconsistent across jurisdictions and companies, leading to significantly different proposal inclusion outcomes for shareholders from issuer to issuer. Additionally, as demonstrated by the Division’s withdrawal from the no-action process, a world with less clarity on shareholder proposals can lead to more litigation when companies seek to adopt new practices and exclude proposals from their materials. It also remains to be seen whether the lack of a Federal arbiter of proposals would accelerate companies seeking to redomicile to more issuer-friendly jurisdictions and whether this might lead to responses from states like Delaware to change their rules to stem corporate defections.

Amendments to Rule 14a-4(c)

The SEC’s proposed amendments to Rule 14a-4(c) would broaden the circumstances in which a company may seek and obtain discretionary voting authority over shareholder proposals submitted outside of the Rule 14a-8 process, which the SEC expects to become more frequent if the proposed Rule 14a-8 rescission is adopted.

In recent years, Rule 14a-4, which was traditionally used for proxy contests regarding director nominations, has become more relevant for shareholder proposals following its amendment as part of the SEC’s “universal proxy” rules. Under Rule 14a-4(c), a company does not have discretionary authority to vote proxies on proposals outside of the company’s proxy materials for which the proponent provides timely notice to the company, files its own proxy statement and form of proxy, and solicits holders of at least the percentage required to carry the proposal. Thus, if the company does not include such proposals in its own proxy materials, it cannot exercise discretionary voting authority over the proxies it receives to vote on the proposals. Additionally, any shareholders wishing to vote on the proposals would need to use the proponent’s, rather than the company’s, proxy card. As a result, a company that wishes to vote proxies on the proposals must include them in its own proxy materials, effectively giving proponents a mechanism to compel inclusion of proposals received outside of the Rule 14a-8 process.

Under the proposed amendments, a company would be able to exercise discretionary voting authority with respect to timely received shareholder proposals if the company includes (i) a brief description of the matter in its proxy statement and how the company intends to vote its discretionary authority, (ii) a cross-reference to the location of the disclosure in the proxy statement on the proxy card and (iii) a check box on the proxy card that would allow shareholders to prevent the company from exercising discretion for that shareholder if checked.

Modernization of Proxy Solicitation Rules

Elimination of the Requirement to Deliver Annual Reports

Rule 14a-3(b) of the Exchange Act currently requires that a proxy statement for a meeting at which directors are elected be accompanied or preceded by an annual report to security holders. Although Form 10-K need only be filed with the SEC and is not required to be mailed to shareholders, most companies opted to satisfy the requirement with an integrated annual report or a Form 10-K “wrapped” with the additional annual report information, thereby using the Form 10-K to satisfy both requirements.

The SEC argues that shareholders receive similar information from both the Form 10-K and annual report, and thus the proposal, if adopted, would eliminate the delivery obligation and, for companies with a Form 10-K on file for the most recent fiscal year, eliminate the separate Rule 14a-3 disclosure requirements altogether. Instead, companies could file a Form 10-K or furnish a compliant annual report prior to sending a proxy statement. Companies would remain free to send a glossy annual report voluntarily if a copy is also furnished to the SEC, though the integrated report option under Rule 14a-3(d) would be eliminated. The proposal, if adopted, would also eliminate the stock performance graph required by Item 201(e) of Regulation S-K for all registrants other than investment companies.

Removal of the 20-Business Day Requirement for Incorporation by Reference

Under current SEC rules, proxy statements that incorporate information by reference must be sent to shareholders at least 20 business days prior to the shareholder meeting. Information statements that incorporate information by reference must also be sent to shareholders at least 20 business days prior to the proposed action to be taken. Form S-4 and Form F-4 also contain a similar minimum 20-business day period requirement when sending a prospectus to shareholders prior to a shareholder meeting if a registrant incorporates by reference into the form information about the registrant or the company being acquired.

The SEC proposes to eliminate these requirements, stating that so doing would provide companies with greater flexibility in planning their shareholder meetings or business combination transactions, without sacrificing investor protection and access to timely information. The SEC notes that the 20-business day requirement predates such filings, and argues the requirement no longer serves its intended purposes of investor protection by allowing time for public dissemination in light of modern technological advances that allow shareholders to access such materials online quickly and efficiently.

Reduction of Broker Search Periods

Rule 14a-13 requires a company to ask its record holders how many sets of proxy materials they require at least 20 business days before the record date. The SEC noted that such searches can now often be completed in as few as three days. The proposal thus provides for a five-business day minimum, which would also apply to information statements under Rule 14c-7. The proposing release acknowledges certain trade-offs in reducing the broker search period, such as dissidents having less lead time to accumulate shares or coordinate a vote. The proposal follows guidance issued by the SEC earlier this year (CFI 133.02), allowing for shorter, reasonable periods to conduct a broker search.

Elimination of Notices of Exempt Solicitation

Rule 14a-6(g) currently requires a shareholder owning more than $5 million of a company’s securities to submit a Notice of Exempt Solicitation on EDGAR for certain written exempt solicitations. The SEC’s proposal, if adopted, would eliminate Notices of Exempt Solicitation for both mandatory and voluntary exempt solicitations.

The SEC noted that the majority of exempt solicitations are now voluntarily submitted by shareholders having ownership below the mandatory threshold. The share of voluntary exempt solicitations rose to approximately 80 percent in 2025 from 40 percent in 2018. The SEC noted its concern with proponents using exempt solicitations to push the rule beyond its remit and transform a company’s EDGAR page into an outlet for the proponent’s communications, which follows the SEC issuing guidance earlier this year that halted the ability of holders of less than $5 million of a company’s securities to make voluntary solicitations on the company’s EDGAR page.

The Rule 14a-2(b)(1) exemption from information and filing requirements of the proxy rules remains unchanged under the proposal, and exempt solicitations remain subject to Rule 14a-9.

Key Takeaways

Management and boards should begin evaluating their proxy practices and how applicable state law and their governing documents currently address shareholder proposals, including eligibility for submission and inclusion in the company’s proxy materials. Companies may wish to engage with their investors to understand their perspectives and preferences in approaching these issues. It may also be prudent for companies to engage with their state legislatures and consider whether their current corporate domicile continues to best serve their needs as state law is developed to bridge the underdeveloped gaps in this area.

The comment period for both proposals is 60 days from publication in the Federal Register, and there is no guarantee that the final rules will mirror the proposals. Vinson & Elkins will continue monitoring these developments. If your company is considering submitting a comment, Vinson & Elkins would be happy to assist.

¹The Division stated that it would only respond to no-action requests made under Rule 14a-8(i)(1), relating to exclusions of proposals deemed an improper subject for shareholder action under state law. Nevertheless, the Division did not receive any such no-action requests during the 2025–2026 proxy season.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.