- within Insurance, Media, Telecoms, IT and Entertainment topic(s)
The Division of Corporation Finance (the "Division") of the Securities and Exchange Commission (the "SEC") released a statement today indicating that it will not respond to no-action requests by companies seeking to exclude shareholder proposals from their proxy materials during the current proxy season (October 1, 2025 – September 30, 2026) other than requests under Rule 14a-8(i)(1) under the Securities Exchange Act of 1934 (the "Exchange Act") (i.e., requests intending to exclude a shareholder proposal on the basis that it is not a proper subject for shareholder action under state corporate law). Companies intending to exclude shareholder proposals from their proxy materials must, however, still notify the SEC and proponents no later than 80 calendar days before filing a definitive proxy statement, as required by Exchange Act Rule 14a-8(j). In addition to applying to the current proxy season, the Division's decision will apply to no-action requests submitted before October 1, 2025, to which the Division has not yet responded. According to the statement, the Division is taking this action to enable it to focus on clearing the large backlog of pending registration statements and other filings resulting from the recent government shutdown and on the basis of the Division's view that, other than with respect to no-action requests under rule 14a-8(i)(1), there is a sufficient body of applicable guidance for companies and proponents to rely on.
The exception for no-action requests based on Rule 14a-8(i)(1) appears intended to encourage companies that may want to challenge precatory proposals (i.e., nonbinding proposals) on the ground that they are improper under state corporate law. Referring in a footnote to a recent speech by SEC Chair Atkins, which we discussed here, questioning the propriety of precatory proposals under state corporate law, the statement notes that "regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals, the Division has determined that there is not a sufficient body of applicable guidance for companies and proponents to rely on . . . the Division will continue to express its views . . . until such time as it determines there is sufficient guidance."
While the Division will not respond substantively to any company submissions for excluding shareholder proposals other than those on the basis of Exchange Act Rule 14a-8(i)(1), the statement notes that if a company includes with its Exchange Act Rule 14a-8(j) notification a representation that it has a reasonable basis to exclude a proposal based on the provisions of Exchange Act Rule 14a-8, prior published guidance, and/or judicial decisions, the Division will respond with a letter indicating that, based solely on the company's or counsel's representation, the Division will not object if the company omits the proposal from its proxy materials.
The Division's statement is available here.
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