The SEC Proposes to Rescind Rule 14a-8 and Reshape the Shareholder Proposal Landscape

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Introduction

On September 16, 2026, the U.S. Securities and Exchange Commission (“SEC”) issued proposed rules that, if adopted, would fundamentally reshape the landscape for shareholder proposals submitted to U.S. public companies. The proposing release, titled Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4 (the “Proposing Release”), includes the following proposed rule changes:

• Complete rescission of Rule 14a-8. This longstanding federal rule requires companies to include qualifying shareholder proposals in their proxy materials.
• Significant amendments to Rule 14a-4. Rule 14a-4 governs when proxy holders may exercise discretionary voting authority (“DVA”). Under the Proposing Release, companies would have a greater ability to exercise DVA to cast votes held by proxy on shareholder proposals without including details about the proposals in company proxy materials, but shareholders would be able to check a box to prohibit the company’s exercise of DVA over shareholder proposals not included in the company’s proxy materials.
• Other corresponding amendments. The Proposing Release includes a number of other related rule changes, including changes to Rule 14a-6 relating to preliminary proxy statement filing requirements in connection with shareholder proposals.

The Proposing Release reflects the SEC’s attempt to withdraw from regulating the scope of matters that may be presented at shareholders’ meetings, a subject that is fundamentally governed by state corporate law and not federal regulations. The SEC believes that Rule 14a-8 has, after decades of evolution, resulted in the SEC setting standards for shareholder proposals that exceed the agency’s statutory mandate under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that should in fact be left to state corporate law.

While final rules are unlikely to be adopted in time to affect the 2027 proxy season, public companies should begin preparing for a dramatically altered shareholder proposal landscape. This client alert summarizes the key elements of the SEC’s proposal and discusses the practical implications for public companies.

Background and Rescission of Rule 14a-8

A Brief History

Rule 14a-8, originally adopted in 1942 as Rule X-14A-7 under the Exchange Act, for more than eighty years served as the primary federal framework requiring companies to include qualifying shareholder proposals in their proxy materials for annual and special meetings. Over the decades, the rule has been amended numerous times. Today, Rule 14a-8 sets forth detailed procedural and substantive requirements that govern a company’s obligation to include a shareholder’s proposal within its own proxy solicitation materials.

The Proposal: Complete Rescission

While Section 14(a) of the Exchange Act authorizes the SEC to regulate the content of proxy solicitations in order to require proxy disclosure that is complete, accurate, and not misleading, it does not grant the agency authority to regulate the scope of matters that may be voted on at a shareholders’ meeting. Because that determination is made under state law, and because Section 14(a) does not preempt state law in this area, the SEC believes it lacks the authority to maintain Rule 14a-8.

The SEC considered a more modest approach that would have involved scaling back Rule 14a-8 rather than eliminating it entirely. The agency ultimately concluded, however, that even a narrower version of Rule 14a-8 would still require the SEC to make determinations about what matters are proper subjects for a shareholder vote, such that the intrusion on state law would not be resolved. Additionally, the SEC believes that the federal standard has discouraged states from developing their own statutory standards for what constitutes a proper matter for a shareholder vote. By rescinding Rule 14a-8 entirely, the SEC hopes to encourage states to establish their own frameworks governing shareholder proposals.

The Upshot

If Rule 14a-8 is rescinded, the immediate result would be a void of authority on the issue of what matters may be submitted by shareholders for a vote at companies’ annual or special meetings. Notably, Texas has already enacted laws permitting companies to place procedural restrictions on shareholders’ ability to submit proposals, but the laws in other states are less clear. In recent years, the conventional wisdom that precatory (or nonbinding) shareholder proposals are permitted under Delaware law has been thrown into doubt. The transition from federal Rule 14a‑8 to state law could be "bumpy," according to SEC Commissioner Hester Peirce, and companies should expect the unexpected as shareholder activists develop and test new methods of putting business before their peers, while states and companies simultaneously attempt to fill the regulatory void left in Rule 14a-8’s place.

Looking Ahead to Next Proxy Season

In the upcoming proxy season, during which Rule 14a-8 will likely still be effective, public companies should expect an uptick in shareholder proposals submitted under Rule 14a-8 by proponents seeking to avail themselves of the existing regime while they can. In particular, proponents may be likely to introduce proposals calling for public companies to adopt policies and procedures mirroring aspects of Rule 14a-8 in an attempt to protect access to company proxy statements for shareholder proposals. Such proposals have already been submitted to shareholders at public companies. In September 2025, shareholders of Tesla, Inc. voted on a proposal that would have required shareholder approval for any amendment to Tesla’s bylaws making the affirmative election permitted under Texas law to set minimum ownership or solicitation thresholds restricting the ability of shareholders to submit proposals at all.

Similarly, a proposal urging the board of directors of The Procter & Gamble Company to “adopt a policy committing the Company to include in its annual proxy statement any shareholder proposal … that satisfies [Rule 14a-8] eligibility thresholds and is otherwise compliant with the procedural and substantive requirements of Rule 14a-8” has been submitted for that company’s upcoming annual meeting to be held in October. With this proxy season being potentially the only remaining chance for shareholders to submit such private-ordering proposals through the Rule 14a-8 process, the likelihood of facing such proposals may be increased, as may be the appetite of shareholders to vote in favor of them. Companies should begin preparing response strategies for private-ordering proposals sooner rather than later.

Proposed Amendments to Rule 14a-4: Discretionary Voting Authority

Current Framework

Rule 14a-4 governs a proxy holder’s ability to exercise discretionary voting authority (“DVA”), which is the authority to cast votes on behalf of a shareholder on matters with respect to which the shareholder has not directed the proxy holder to vote in favor or against. The current Rule 14a-4 provides for two different types of DVA that proxy holders may exercise: 

• First, under Rule 14a-4(b)(1), proxy holders may exercise DVA with respect to matters (whether submitted by a shareholder proponent or the company) identified on the proxy card where the shareholder has returned a signed proxy card that is unmarked as to the matter.
• Second, proxy holders possess DVA under Rule 14a-4(c) under certain circumstances with respect to matters submitted by a shareholder proponent.
  • Under Rule 14a-4(c)(1), if the proponent’s proposal is submitted in an untimely fashion, the proxy holder may exercise DVA with respect to the proposal so long as the proxy statement or the proxy card includes a specific statement as to the existence of DVA with respect to untimely matters.  
  • Additionally, under Rule 14a-4(c)(2), a proxy holder possesses DVA with respect to proposals submitted by a shareholder proponent who does not also conduct its own proxy solicitation so long as the company’s proxy statement includes advice on the nature of the matter and how the company intends to vote on the matter.^[1]

Importantly, however, Rule 14a-4(c)(2) specifically prohibits the exercise of DVA on proposals with respect to which the proponent provided timely notice and solicited its own proxies to vote at the meeting. When proponents have satisfied those conditions, companies have historically felt compelled to include the shareholder proposal in the company’s own proxy materials even though no SEC rule directly requires them to do so, because otherwise a company would not be able to exercise the DVA provided by Rule 14a-4(b)(1) to vote unmarked proxy cards on the shareholder proposal. Furthermore, if a company omitted the proposal from its proxy materials, other shareholders wishing to vote on the proposal would need to use the proponent’s competing proxy card to cast a vote, since only the proponent’s proxy card would contain all items to be voted on. The resulting fragmented voting process would restrict the company’s visibility into the number of votes cast, both on the shareholder proposal and in general, leading companies to include shareholder proposals in their proxy statements despite the lack of a direct obligation to do so.

The Proposed Amendment

To address this concern, the SEC proposes to amend Rule 14a-4(c) to “provide companies with greater flexibility, and shareholders with greater control, regarding proposals for which a company may seek discretionary voting authority.” Under the proposed rules, proxy holders would be able to exercise DVA with respect to shareholder proposals, even if those proposals were timely and the proponent solicited its own proxies, without including the shareholder proposals in the proxy statement or proxy card, so long as:

• The company includes in its proxy statement a brief description of the shareholder proposal and how the proxy holders will vote when exercising DVA on the proposal;
• The company’s proxy card contains a cross reference to the location of that brief description and voting plans; and
• The shareholder delivering the proxy card does not affirmatively opt out of granting DVA with respect to matters not stated on the proxy card, which a shareholder would accomplish by checking a newly required checkbox on the proxy card.

The Proposing Release does not include any amendments to Rule 14a-4(b), and therefore proxy holders would continue to possess DVA with respect to uninstructed proposals that are included on a proxy card signed by a shareholder.

Rule 14a-9 Considerations: Disclosure Obligations After Rescission

Even if the rescission of Rule 14a-8 and amendments to Rule 14a-4 are adopted as proposed, companies should not assume they are free to ignore shareholder proposals entirely when preparing their proxy statements.

Rule 14a-9 is the SEC’s anti-fraud provision for proxy solicitations. The Proposing Release does not include any amendments to Rule 14a-9, which prohibits any proxy statement from containing any statement that, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or that omits to state any material fact necessary in order to make the statements therein not false or misleading. This is a broad standard, and it could have implications for how companies treat shareholder proposals. When preparing proxy statements for meetings at which shareholder proposals will be presented, companies may need to consider whether the omission of information about those proposals could render the proxy statement materially misleading.

The SEC addressed this concern in the Proposing Release, indicating that it does not view the omission of the details of a shareholder proposal to constitute a Rule 14a-9 violation, so long as the company has included a brief description of the proposal in accordance with amended Rule 14a-4(c) and Rule 14a-9. However, proponents may disagree with the Proposing Release and challenge a company’s exclusion or scant description of a proposal in court, where the SEC’s interpretive position is persuasive but not binding. In past situations involving shareholder proposals submitted outside of the Rule 14a-8 regime where the proponents have conducted their own solicitation, companies have included in their proxy statements considerable information about, and substantive statements regarding the company’s position on, shareholder proposals, likely driven by a mixture of Rule 14a-9 concerns and a pragmatic preference to make the company’s case in a communication to its other shareholders. This practice suggests that, in certain circumstances, companies may determine to include substantial disclosure concerning shareholder proposals even in the absence of Rule 14a-8.

Other Rule Changes

The Proposing Release includes a number of other proposed amendments to related rules under the Exchange Act: 

• The amendments to Rule 14a-4(c) include language clarifying that the 45-day default threshold for timely submission of shareholder proposals is overridden by deadlines set under provisions of applicable state or foreign law or the company’s governing documents.
• Under proposed amendments to Rule 14a-6, a company receiving a shareholder proposal after the rescission of Rule 14a-8 would be required to file a preliminary proxy statement only if the proposal was accompanied by a “solicitation in opposition” to the company’s intended vote. This rule is consistent with the approach taken with respect to Rule 14a-8 proposals, where the requirement to file a preliminary proxy was not triggered by a shareholder proposal that was not accompanied by an independent solicitation of proxies by the proponent.
• Other proposed amendments reduce or alter disclosure requirements in proxy statements to reflect the proposed elimination of Rule 14a-8.

Practical Implications for Public Companies

If these amendments are adopted as proposed, key implications for public companies, their boards, and their advisors would include:

• Elimination of the Rule 14a-8 framework. The federally established eligibility thresholds, substantive exclusions, and no-action letter process to determine what shareholder proposals must be included in a proxy statement would be eliminated.
• Increased importance of state law and governing documents. With the uniform federal framework of Rule 14a-8 removed, state corporate law and company governing documents (e.g., charters, bylaws, and any applicable governance guidelines) would become the primary legal frameworks for determining what constitutes a proper matter for shareholder action.
• Evolving shareholder engagement strategies. The dynamics of shareholder engagement around proposals will change significantly. Well-capitalized institutional investors and activist shareholders will likely find alternative means to convey their views.

For additional information about any of the above developments, or to discuss any questions that you may have, please contact a member of Maynard Nexsen’s Public Company Advisory Group.

This Client Alert is for information purposes only and should not be construed as legal advice. The information in this Client Alert is not intended to create and does not create an attorney-client relationship.

^{[1] For an example of the disclosure provided in connection with a company’s exercise of DVA pursuant to existing Rule 14a-4(c)(2), see page 103 of the proxy statement relating to Walmart, Inc.’s 2019 annual meeting.}