SEC votes to propose scrapping rule that lets shareholders force a vote

The Securities and Exchange Commission voted on September 16 to propose rescinding Rule 14a-8, the regulation that has required public companies to place qualifying shareholder proposals on proxy ballots since 1942, according to the SEC’s announcement. The commission also proposed amendments to Rule 14a-4(c) that would give companies more discretion to seek voting authority over shareholder proposals.

If finalized, the rescission would end the uniform federal framework governing which shareholder proposals companies must include in their proxy statements, shifting the question to state corporate law and company bylaws, according to analysis from Jones Day. Companies without bylaw provisions addressing shareholder proposals would have no federal obligation to place them on the ballot.

SEC Chair Paul Atkins said the proposals reflect “two of my highest regulatory priorities,” the first being “ensuring that the Commission does not improperly intrude into state corporate law,” according to ESG Today’s report. Commissioner Mark Uyeda said Rule 14a-8 “has been co-opted to advance the agendas of various political interests” by parties acting without fiduciary duty to a corporation or its shareholders, the outlet reported.

No Democrat currently serves on the five-seat commission, according to American Banker’s coverage. The commission will accept public comments on both proposals for 60 days after they are published in the Federal Register.

The rescission proposal follows a series of steps the agency’s Division of Corporation Finance has already taken to step back from the shareholder proposal process. In November 2025, the division said it would no longer provide substantive no-action review of company requests to exclude proposals from the ballot, and in August 2026 it said it would stop responding to no-action requests altogether, according to the SEC’s own rulemaking filing.

Investor advocacy groups said the rescission would weaken shareholders’ ability to hold corporate boards accountable. Glenn Davis, executive director of the Council of Institutional Investors, called the proposed rescission “a solution in search of a problem,” according to American Banker. Andrew Collier of the group Freedom to Invest said rescinding the rule “will increase instability and costs for both companies and investors,” the outlet reported.

Josh Zinner, CEO of the Interfaith Center on Corporate Responsibility, called the SEC’s proposal “an attack on the fundamental rights of shareholders” and said the organization “plans to respond vigorously to this unprecedented threat to the rights of shareholders,” according to ICCR’s statement. The group’s general counsel, Beth-Ann Roth, said “the SEC is on shaky grounds” legally, arguing that “Congress was clear in its mandate to the SEC that it promulgate rules to ensure fair corporate suffrage.”

Andrew Behar, CEO of the shareholder advocacy nonprofit As You Sow, said Rule 14a-8 “is not a fringe mechanism” but “the basic plumbing that allows owners of public companies to hold management accountable,” according to the organization’s statement. As You Sow’s Danielle Fugere said the cost to companies of including a shareholder statement on their proxy “is miniscule compared to the cost to shareholders and the market of shielding issuers and their boards from investor concern about unaddressed risk.”

The SEC’s rulemaking record shows the agency has withdrawn from every stage of the no-action review process over the past year, ending in this month’s proposal to eliminate the underlying rule entirely.