The Division of Corporation Finance (the “Division”) of the U.S. Securities and Exchange Commission (the “SEC”) citing resource constraints and an extensive body of guidance announced on November 17, 2025 that, at least until September 30, 2026, it will not respond to no-action requests related to excluding shareholder proposals under Rule 14a-8, but will review requests to exclude non-binding (or precatory) proposals pursuant to Rule 14a-8(i)(1) in light of recent state law developments regarding the legality of such proposals.
Generally, a company is required to include a properly submitted shareholder proposal in its proxy materials unless the proposal may be excluded under Rule 14a-8 and the company follows a specific notice process. Historically, a company that sought to exclude a shareholder proposal from its proxy materials would submit a no-action request to the Division requesting the staff confirm that it would not recommend enforcement action if the company were to exclude the proposal pursuant to Rule 14a-8. If the staff agreed with the company’s position, the staff would respond with a no-action letter. This letter would provide certainty to the company, and other companies could use the letter as non-binding guidance.
Now, companies that wish to exclude shareholder proposals will still be required to submit a notice to the SEC no later than 80 calendar days before filing a definitive proxy statement, pursuant to Rule 14a-8(j). If a company includes in that notice an unqualified representation that the company has a reasonable basis to exclude the proposal, the Division will, based solely on the company’s or counsel’s representation, respond that the Division will not object if the company omits the proposal from its proxy materials. This new policy is applicable to all Rule 14a-8 no-action requests received before October 1, 2025 that had not yet received a response from the Division and any new requests received from October 1, 2025 until September 30, 2026.
This policy change aligns with other changes announced by the Division in 2025. Under Staff Legal Bulletin No. 14M, the Division rescinded guidance provided under the previous administration and effectively lowered the burden for companies seeking to exclude shareholder proposals under the “economic relevance” or “ordinary business” exclusions in Rule 14a-8.
The Division’s recent policy change for the shareholder proposal process may streamline the playbook for companies while introducing new uncertainty for this proxy season. With the Division on the sidelines for most 2026 annual meetings, shareholder proposal decision-making is likely to include more pragmatic judgment calls than legalistic arguments: companies will have to huddle with legal counsel and investor relations professionals to make the call on whether excluding a shareholder proposal is worth the legal or reputational risk, knowing that they will not receive a substantive no-action response from the Division staff. If you have any questions about excluding a shareholder proposal from your proxy materials, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets group.