On September 16, 2026, the Securities and Exchange Commission (the “SEC”) proposed eliminating the federal overlay for public companies’ treatment of shareholder proposals that has existed under Rule 14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”) in some form since the 1940s. With this proposed change, the SEC is also proposing to expand public companies’ ability to exercise discretionary proxy voting authority over shareholder proposals and to modernize certain rules related to proxy solicitations.
Eliminate Rule 14a-8 as a shareholder proposal mechanism
Exchange Act Rule 14a-8, as first adopted in 1942, established a framework through which shareholders could request a public company include a shareholder proposal in its proxy statement, in reliance on state corporate law, and allow other shareholders to vote by proxy on the proposal, in compliance with the SEC’s proxy solicitation rules. The modern Rule 14a-8 sets forth eligibility and procedural requirements for a shareholder submitting a proposal to a public company and substantive bases under which a public company is permitted to exclude a shareholder proposal from its proxy statement. Over time, Rule 14a-8 became a well-worn path for shareholders to submit proposals to public companies for consideration at shareholder meetings. If the SEC rescinds Rule 14a-8, a shareholder’s ability to present a proposal at a public company’s shareholder meeting would depend solely on state law and the company’s governing documents instead of the federal standard that has developed over time under Rule 14a-8 and associated SEC guidance.
The practical consequences of this change would be that states pass legislation to govern shareholder proposals; state courts begin intervening in shareholder proposals to a greater extent and develop a state-specific common law for shareholder proposals; and/or individual public companies would face the burden of determining whether to include shareholder proposals in their proxy statements without guidance from the SEC or states.
Expand discretionary proxy voting authority under Rule 14a-4
The SEC also proposed amendments to the rule governing a company’s ability to exercise discretionary voting authority over proposals submitted by shareholders outside of the Rule 14a-8 process. Under the current Rule 14a-4(c), a single shareholder can block a company from exercising discretionary proxy voting authority over a shareholder proposal for all shareholders if the proponent: (i) timely notifies the company; (ii) delivers a proxy statement to shareholders; and (iii) proves that it solicited votes from a sufficient percentage of shareholders. Under the proposed amendment, a company would be able to exercise discretionary proxy voting authority over shareholder proposals if it: (a) briefly describes the timely-received proposal in its proxy statement and indicates how it intends to vote on the proposal with its discretionary authority; (b) includes a cross-reference to this description on the proxy card; and (c) includes a single checkbox on the proxy card that would prevent the company from exercising discretionary proxy voting authority over that shareholder’s proxy.
Modernize proxy solicitation process
Separately, the SEC has proposed several related rule amendments designed to modernize the proxy solicitation process by adapting to changes in technology and market practice. The proposed amendments would:
- Eliminate the stock performance graph disclosure required under Rule 14a-3 for companies other than investment companies.
- Eliminate the requirement under Rule 14a-3 to deliver an annual report to shareholders with the proxy statement. Under the proposed rule, as long as a company has already filed its Annual Report on Form 10-K for the most recently completed fiscal year, it would not be required to deliver a separate annual report with its proxy statement.
- Shorten the minimum broker search period from 20 business days to five business days.
- Remove the requirement to deliver a proxy statement to shareholders at least 20 business days before a shareholder meeting when information is incorporated by reference into the proxy statement.
- Rescind Rule 14a-6(g) and the related ability for shareholders conducting an exempt solicitation to publish reports on the subject company’s EDGAR page. Under the proposal, EDGAR would be reserved as a centralized repository for required company disclosure instead of also including voluntary filings made by shareholders conducting exempt solicitations. Under the proposal, the SEC emphasized that shareholders can communicate through other channels.
What’s next?
The SEC has requested comments on both proposals by November 20, 2026. Although the proposals, if adopted, could fundamentally alter the shareholder proposal landscape, public companies should recognize that the existing rules remain in effect during the SEC’s rulemaking process. Because of the timing of the proposal and comment period, the most likely scenario is that public companies will be subject to the existing rules for the 2027 proxy season.
Given the attention in this area and the comments received to date, it seems likely that the proposed rescission of Rule 14a-8, if adopted, would face legal challenges.
While this rulemaking is in progress, it is likely too early for a public company to make changes in anticipation of the recission of Rule 14a-8 and related rule proposals. Instead, a public company could consider analyzing its current governance scheme to understand what would happen if the rule were rescinded and no changes are made under the laws of its state of incorporation. Armed with that knowledge, the company would not be starting from zero if the shareholder proposal landscape changes as proposed and if states pass legislation to fill the void left by Rule 14a-8’s recission.
If you have any questions regarding the proposed amendments and their potential impact, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets group.