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On November 17, 2025, the SEC's Division of Corporation Finance (Division) issued a statement regarding the Division's role in the Exchange Act Rule 14a-8 process for the current proxy season (the Statement). The Statement indicates that, due to resource and timing constraints following the government shutdown, the large volume of filings requiring prompt attention, and the extensive body of guidance available, the Division will not "respond to no-action requests for, and express no views on, companies' intended reliance on any basis for exclusion of shareholder proposals under Rule 14a-8, other than no-action requests to exclude a proposal under Rule 14a-8(i)(1)."1 In light of recent developments regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals, the Division will continue to review and express its views on no-action requests related to Rule 14a-8(i)(1) until "it determines there is sufficient guidance available to assist companies and proponents in their decision-making process."
Background
Under Exchange Act Rule 14a-8(i), there are 13 substantive bases that a company can use to exclude a shareholder proposal from its proxy statement, including, among others: proposals that are not proper for shareholder action under state law (14a-8(i)(1)); proposals that are not significantly related to the company's business; proposals that relate to the company's ordinary business operations; proposals that have been substantially implemented by the company; and re-submitted proposals that garnered less than a specified percentage of the vote when last presented.
Procedure
The Statement notes that the Division will continue to follow its existing procedures with respect to the proposed exclusion of a proposal under Rule 14a-8(i)(1). However, while companies that intend to exclude a proposal on any other basis must still notify the SEC and proponents no later than 80 calendar days before filing a definitive proxy statement, the Division will not respond or express its views on the issue. Subject to that notice requirement, companies will be free to exclude shareholder proposals (except under Rule 14a-8(i)(1)) without any further engagement with the SEC staff.
The Statement also notes that, although the Division will not respond substantively, companies' may wish to receive some response to its notification. If a company wishes to receive a response 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, as part of the notification described above, 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 Division will then respond by letter indicating that, based solely on such representation, the Division will not object if the company omits the proposal from its proxy materials. However, the Division will not evaluate the adequacy of the representation or express a view on the company's basis for exclusion. As a result, companies should take this into account when determining whether to respond.
Companies that have already submitted a request based on other than Rule 14a-8(i)(1) that wish to receive a Division response should submit a notice that includes the foregoing representation. In such cases, the time of the initial submission will apply for purposes of the 80-day requirement in Rule 14a-8(j).
The Division of Investment Management, which is responsible for responding to Rule 14a-8 requests related to investment companies, will follow a substantially similar process.
Effective Date
The Statement applies to the current proxy season (October 1, 2025 to September 30, 2026) as well as no-action requests received before October 1, 2025, to which the Division has not yet responded.
Crenshaw Response
SEC Commissioner Caroline Crenshaw, in a severely worded criticism, stated that the Statement "is more of a giveaway to issuers than an exercise in resource allocation. And, more directly, it is an act of hostility toward shareholders." She concludes by stating that the announcement "cloaks itself in neutrality by expressing that the Division will not weigh in on any company's exclusion of shareholder proposals, but then it hands companies a hall pass to do whatever they want. It effectively creates unqualified permission for companies to silence investor voices (with "no objection" from the Commission)."
Footnote
1. Rule 14a-8(i)(1) permits exclusion of a proposal that "is not a proper subject for action by shareholders under the law of the jurisdiction of the company's organization."
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