SEC Staff Reviews Of Requests To Exclude Shareholder Proposals During 2026 Proxy Season

On November 17, 2025, the Staff of the Securities and Exchange Commission's (the "SEC") Division of Corporation Finance published a new statement (the "Statement") regarding the review of requests to exclude shareholder proposals by both the Division of Corporation Finance and the Division of Investment Management (together, the "Divisions") during the 2026 proxy season (including no action requests received by the Divisions prior to October 1, 2025 and to which the Divisions had not responded as of November 17). Specifically, due to a shortage of resources following the recently-ended government shutdown in combination with the "extensive volume" of Staff guidance regarding shareholder proposals, the Divisions will not respond to or express views on requests to exclude shareholder proposals other than requests under Rule 14a-8(i)(1) of the Securities Exchange Act of 1934, as amended. The Staff's approach represents a dramatic departure from past proxy seasons.

Further, the Divisions' decision to continue to review requests to exclude proposals under Rule 14a-8(i)(1) appears temporary, based on "uncertainty in the application of state law and Rule 14a-8(i)(1) to precatory proposals," such that these reviews may stop when "there is sufficient guidance available to assist companies and proponents in their decision-making process."

By way of background, Rule 14a-8(i)(1) permits a company to exclude a proposal that is not a "proper subject" for shareholder action under state law, which raises a question as to whether precatory, or non-binding, shareholder proposals are, indeed, "proper subjects." In October, SEC Chairman Paul Atkins questioned whether Rule 14a-8(i)(1) actually permits companies to exclude precatory shareholder proposals as not being proper subjects, and concluded that this is likely the case, at least with regard to Delaware companies (read more here). Chair Atkins also suggested that a company could, on advice of counsel that a proposal is not a "proper subject" under state law, seek to rely on Rule 14a-8(i)(1) to exclude the proposal, expressing his "high confidence" that the SEC Staff would "honor" this position, at least with regard to that specific company. Further, should a conflict with a proposal proponent arise, Chair Atkins raised an open question as to whether the SEC would take the issue to the Delaware Supreme Court (perhaps leading to the "sufficient guidance" referenced in the Statement).

In addition, the Statement reminded companies of the notice requirement in Rule 14a-8(j), under which companies that intend to exclude shareholder proposals from their proxy materials must provide timely notice (no later than 80 calendar days before filing a definitive proxy statement) to both the SEC and proponents. While this notice is still required, the Statement noted that it is informational only, and that there is no requirement that companies seek the Staff's views regarding their intended exclusion of a proposal, and no response from the Staff is required. However, if a company that provides notice wishes to receive a response from the Divisions for any proposal that it intends to exclude pursuant to a basis other than Rule 14a-8(i)(1), the company or its counsel must include "an unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions." The relevant Division will respond with a statement that, based solely on the aforementioned opinion, it will not object if the company omits the proposal from its proxy materials. No substantive views or opinions will be expressed.

Commissioner Crenshaw's Response

In a fiery response, Commissioner Caroline Crenshaw described the Statement as an "act of hostility toward shareholders." In her view, by not expressing substantive views on requests to exclude certain proposals, but still responding 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 is indirectly blessing the company or its counsel's views, even where the Division might have disagreed had it substantively analyzed these views. In her words, "[t]oday's missive will give the false impression that the Division is 'not objecting' to a company's position because it agrees with the grounds of the submission; when in fact the Division is 'not objecting' because staff have been ordered to rubber stamp those submissions irrespective of their content."

Commissioner Crenshaw also addressed the exclusion of no action requests pursuant to Rule 14a-8(i)(1) from the Statement, describing the exclusion as a change in "institutional policy" rather than law. She described Chair Atkins speech, detailed above, as "leav[ing] the uncanny impression that the Commission is now anointing itself the newest Vice Chancellor on the Delaware Court of Chancery, effectively creating new state law (which it can then itself bless), to carry out an agenda that affords companies sweeping rights to reject shareholder proposals without impediment or regard for precedent."

In sum, the potential magnitude of this change to the shareholder proposal process cannot be understated, and practitioners and companies will need to carefully consider how the new guidance impacts their actions in the 2026 proxy season.

Read the Statement here and Commissioner Crenshaw's statement here.

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