Key Takeaways
- • The SEC's September 16, 2026 proposal to rescind Rule 14a-8, the 1942 federal shareholder proposal regulation, has a 60-day comment period ending November 20, 2026.
- • An institutional investor coalition, organized through the Interfaith Center on Corporate Responsibility (more than 300 institutional investor members), circulated an open letter on November 2 signed by nearly 100 investors representing $2.3 trillion in assets urging the business community to oppose the rescission.
- • The National Association of Manufacturers warned in an October 29 SEC comment letter that rescission could force costly litigation over proponent eligibility and proposal inclusion, and urged the SEC to resume no-action letter consideration until rescission is finalized.
- • The SEC permanently ended its role in adjudicating shareholder proposal disputes in August 2026 under Chair Paul Atkins, shifting more control over proxy ballots to companies.
- • During the 2026 proxy season, six proponents sued six companies over excluded proposals; three cases settled and three went to court.
Summary
The Securities and Exchange Commission is soliciting comments on its September 16 proposal to rescind Rule 14a-8 under the Securities Exchange Act of 1934, a rule adopted in 1942 that governs when companies must include shareholder proposals in their proxy materials. The proposal has a 60-day comment period ending November 20. Investor and business groups, typically opposed on this issue, are both warning that rescission could produce a near-term increase in litigation. Critics of the move say it would make it harder for pension funds and retail investors to press companies on issues such as board composition, CEO pay, and climate risk, while shifting more authority over the process to individual companies and state regulators.
An investor coalition led through the Interfaith Center on Corporate Responsibility, which represents more than 300 institutional investors, circulated an open letter on November 2 to the business community. Nearly 100 signatories representing $2.3 trillion in assets argued that the existing framework "is better for companies and investors alike" than an unstable landscape of changing state laws, independent solicitations, director accountability initiatives, and litigation. The letter urges companies to oppose the SEC proposal and adopt internal policies to keep legitimate shareholder proposals in proxy materials.
The business side has long argued that special interest groups exploit the process, imposing time and cost burdens on companies. The National Association of Manufacturers, in an October 29 comment letter, described the process as "hijacked by a cadre of professional shareholder proponents." The NAM nonetheless raised concerns about the proposal itself, warning that if Rule 14a-8 is rescinded, companies and proponents may be forced to litigate disputes over proponent eligibility or whether a given proposal must be included. It urged the SEC to resume considering no-action letters until rescission is final to "reduce disruption and spare companies and proponents the substantial cost and unpredictability of litigation."
The concerns follow the SEC's August decision to permanently end its role in adjudicating shareholder proposal disputes. Under Chair Paul Atkins, the agency said it is not its place to decide what appears on a company's proxy ballot, having previously handled no-action requests in which companies sought permission to exclude proposals. During the 2026 proxy season, with the SEC absent from that role, six proponents sued six companies that had excluded their proposals; three cases settled and three proceeded to court. The NAM's letter is one of many submissions the SEC will weigh after the November 20 deadline.
An investor coalition led through the Interfaith Center on Corporate Responsibility, which represents more than 300 institutional investors, circulated an open letter on November 2 to the business community. Nearly 100 signatories representing $2.3 trillion in assets argued that the existing framework "is better for companies and investors alike" than an unstable landscape of changing state laws, independent solicitations, director accountability initiatives, and litigation. The letter urges companies to oppose the SEC proposal and adopt internal policies to keep legitimate shareholder proposals in proxy materials.
The business side has long argued that special interest groups exploit the process, imposing time and cost burdens on companies. The National Association of Manufacturers, in an October 29 comment letter, described the process as "hijacked by a cadre of professional shareholder proponents." The NAM nonetheless raised concerns about the proposal itself, warning that if Rule 14a-8 is rescinded, companies and proponents may be forced to litigate disputes over proponent eligibility or whether a given proposal must be included. It urged the SEC to resume considering no-action letters until rescission is final to "reduce disruption and spare companies and proponents the substantial cost and unpredictability of litigation."
The concerns follow the SEC's August decision to permanently end its role in adjudicating shareholder proposal disputes. Under Chair Paul Atkins, the agency said it is not its place to decide what appears on a company's proxy ballot, having previously handled no-action requests in which companies sought permission to exclude proposals. During the 2026 proxy season, with the SEC absent from that role, six proponents sued six companies that had excluded their proposals; three cases settled and three proceeded to court. The NAM's letter is one of many submissions the SEC will weigh after the November 20 deadline.
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