SEC proposes rescinding Rule 14a-8 and modernizing the proxy solicitation framework

The United States Securities and Exchange Commission (SEC) has issued two related proposing releases that would alter the federal proxy solicitation framework under the Securities Exchange Act of 1934, as amended (Exchange Act).

• In Exchange Act Release No. 34-106383, the SEC proposes to rescind Rule 14a-8, the federal shareholder proposal rule, and to amend Rule 14a-4(c) to expand companies’ discretionary voting authority over certain matters not included on their proxy cards (Rule 14a-8 rescission proposal)

• In Securities Act Release Nos. 33-11439; 34-106385; 39-2566, the SEC proposes to modernize proxy solicitation rules by eliminating certain delivery and filing requirements, shortening the minimum broker search period, and making a series of technical and conforming amendments (proxy solicitation modernization proposal)

Rule 14a-8 rescission proposal

In the Rule 14a-8 rescission proposal, the SEC states that, in its view, Rule 14a-8 exceeds its statutory authority under Exchange Act Section 14(a) by intruding into state-law determinations of what matters are proper for shareholder action and how shareholder rights are structured.

In the proposal, the SEC notes that corporate law and shareholder voting rights are traditionally matters of state law, many exclusion bases under Rule 14a-8 (e.g., “ordinary business,” economic relevance, duplication, substantial implementation, resubmission thresholds) are not grounded in state law and the existence of a uniform federal rule may have inhibited development of state law and private ordering approaches to shareholder proposals.

The release also cites policy considerations in support of its proposal to rescind the rule, including costs to companies, relatively low levels of support from shareholders, growth in proposal volume compared to the number of proxy statements filed, and the use of proposals for private bargaining. According to the release, in 2025, 56 of 786 submitted proposals (approximately seven percent) received majority shareholder support.

The SEC notes that rescission of Rule 14a-8 would remove the notion that states and company organizational documents cannot provide standards for shareholder proposals because they would be preempted by Rule 14a-8. The release further implies that, in the absence of Rule 14a-8, states and companies may be incentivized to adopt their own laws and governance document provisions, respectively, related to shareholder proposals, which the release states they have been hesitant to do because of potential criticism from certain institutional investors and other parties. In such a case, state law or the organizational document would govern whether the shareholder proposal was appropriate, and SEC proxy rules would facilitate its application to the process of soliciting proxies.

Under the proposal, federal law would no longer require the inclusion of shareholder proposals in company proxy materials based on compliance with the conditions of Rule 14a-8. State law, and where authorized, company governing documents, such as charters and bylaws, would determine whether and when shareholder proposals may be included in company proxy materials. Accordingly, disputes about the proper subjects for shareholder action would be resolved by state courts under state corporate law rather than through a federal no-action process.

Proposed amendments to Rule 14a-4(c)

In connection with the proposed rescission of Rule 14a-8, the SEC also proposes to amend Rule 14a-4(c), which governs the circumstances under which companies may exercise discretionary voting authority on matters not included on their proxy cards. Under the current rules, if a shareholder submits a proposal outside of Rule 14a-8 and conducts its own proxy solicitation, the company is generally prohibited from exercising discretionary voting authority on that proposal if the proponent distributes proxy materials to holders of the percentage of shares required to carry the proposal.

The proposed amendments to Rule 14a-4(c) would expand companies’ ability to exercise discretionary voting authority with respect to timely received shareholder proposals that are not included on the company’s proxy card, regardless of whether the proponent conducts its own solicitation. Under the proposal, a company could exercise discretionary voting authority on such proposals if it:

• Includes in its proxy statement a brief description of the matter and how the company intends to vote the shares in its discretion,
  
  
• Provides a cross-reference on the proxy card to the location of this disclosure in the proxy statement, and
  
  
• Adds a checkbox on the proxy card that allows shareholders to opt out of granting discretionary authority to the company on that proposal. If a shareholder checks the box, the company would not be able to exercise discretionary voting authority for that shareholder’s shares on the proposal.

The SEC states that the amendments are intended to provide companies with greater flexibility in managing shareholder proposals submitted in the absence of a Rule 14a-8 process, while also giving shareholders the ability to determine whether to grant the company discretion over how to vote their shares on such matters. The SEC notes that these changes may become more significant if Rule 14a-8 is rescinded, as companies may receive more proposals outside the traditional Rule 14a-8 framework.

Other technical amendments

In addition to rescinding Rule 14a-8 and amending Rule 14a-4(c), the Rule 14a-8 rescission proposal includes a series of technical and conforming amendments to the proxy rules and related forms.

For example, the SEC proposes to delete Rule 14a-4(c)(6), which currently references proposals omitted pursuant to Rule 14a-8 or Rule 14a-9, and would amend Rule 14a-5(e) to reflect that deadlines for submitting shareholder proposals for inclusion in proxy materials would be governed by state law or company governing documents, rather than by Rule 14a-8.

Additionally, the SEC proposes to remove Item 4 of Schedule 14C, which requires companies to identify timely-received shareholder proposals in information statements, to ensure that shareholders receiving proxy statements and information statements receive equivalent information. The SEC states that these amendments are intended to facilitate implementation of the proposed changes and to remove obsolete references to Rule 14a-8 throughout the federal securities rules. The proposal also includes conforming amendments to other rules, forms, and schedules to eliminate references to Rule 14a-8 and to update terminology as necessary.

Potential impact

The SEC’s economic analysis of the proposed rescission of Rule 14a-8 highlights that companies and shareholders could experience reduced compliance costs and administrative burdens, as well as a potential reduction in the volume of shareholder proposals included in proxy materials.

The SEC notes that these changes could allow management to focus more on core business activities and may streamline proxy communications. However, the SEC also acknowledges that rescinding Rule 14a-8 could result in the loss of some proposals that may have provided value to shareholders or served as mechanisms for engagement, and that the overall impact will depend on how state law and company governing documents address shareholder proposals going forward.

The proxy solicitation modernization proposal

The proxy modernization proposal would streamline the proxy solicitation process through the elimination of certain deadlines and delivery requirements that the SEC states have become unnecessary in light of technological developments.

Elimination of the requirement to deliver an annual report to security holders

Current Rule 14a-3(b) generally requires that, in connection with an annual meeting (or special meeting in lieu thereof, or written consent) at which directors are to be elected, the proxy statement be “accompanied or preceded” by an annual report to security holders that includes similar disclosure items to Form 10-K.

The principal substantive disclosures required in the Rule 14a-3(b) annual report, but not required to be included in the Form 10-K, are the stock performance graph required under Item 201(e) of Regulation S K (which many registrants voluntarily include in Form 10-K and which the SEC notes is widely available from online sources), and disclosure about changes in certifying accountants under Item 304(a) of Regulation S-K, which is already required to be disclosed in a Form 8-K.

Many companies already satisfy Rule 14a-3(b) by delivering either a Form 10-K “wrap” (an annual report built around Form 10-K), or a Form 10-K prepared on an “integrated” basis and delivered to shareholders in place of a traditional “glossy” report.

The proposal would eliminate the requirement that companies deliver an annual report to security holders in connection with a shareholder meeting for director elections. Instead, companies would be able to satisfy Rule 14a-3(b) by relying on a previously filed Form 10-K for the most recent fiscal year; companies without a Form 10-K on file could satisfy Rule 14a-3(b) by furnishing an annual report to security holders on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.

In addition, the requirement for the stock performance graph would be removed for all companies, except investment companies. Companies would still be able to voluntarily send “glossy” or other annual reports to shareholders, including CEO letters and other narrative content, provided such materials are furnished on EDGAR.

Elimination of the 20-business-day delivery deadline for proxy statements incorporating documents by reference

Currently, Note D.3 to Schedule 14A and parallel provisions in Forms S-4 and F-4 require that when information is incorporated by reference into a proxy statement, the proxy statement must be sent to shareholders at least 20 business days before the meeting or vote. This requirement was adopted to ensure that shareholders had adequate time to request, receive, and review incorporated documents before voting.

Under the proposal, the SEC would eliminate this requirement, reasoning that it was adopted before the establishment of EDGAR and the greater accessibility it affords the investing public in retrieving filings that are incorporated by reference into proxy statements. In addition, the SEC contends that to the extent investors request documents that are incorporated by reference, companies may provide them electronically.

Elimination of the requirement to submit Notices of Exempt Solicitation

Current Rule 14a-6(g) requires certain shareholders that conduct exempt solicitations, primarily those beneficially owning more than USD5 million of a registrant’s securities, to submit a Notice of Exempt Solicitation that is filed on EDGAR so that written soliciting material is publicly available.

Although the rule was intended to provide visibility into nonpublic, exempt, written solicitations by large shareholders, the notices have drawn increased scrutiny in recent years, as noted in this blog post. For example, the SEC observes that a large number of Notices of Exempt Solicitation now appear to be voluntary filings, submitted by shareholders below the USD5 million threshold, or used to upload material, such as press releases, already publicly available elsewhere. Accordingly, companies have other means for learning about these solicitations.

The SEC states that Notices of Exempt Solicitation no longer serve their intended purpose and that shareholders have alternative means of publishing exempt written solicitations. Accordingly, the SEC proposes to rescind the Rule 14a-6(g) requirement to submit Notices of Exempt Solicitation entirely, such that entities conducting exempt solicitations under Rule 14a-2(b)(1) would no longer file these notices, regardless of ownership level, solicitation format, or public availability of the solicitation. In furtherance of this decision, the proposal also makes conforming amendments in other rules and in Regulation S-T to delete references to the required submission of Notices of Exempt Solicitation.

Shortening the minimum broker search period

Rule 14a-13 requires companies to inquire of record holders (e.g., broker-dealers and banks) about the number of sets of proxy materials needed for forwarding to beneficial owners, a requirement known as the “broker search.” Companies currently must allow at least 20 business days between the broker search and the mailing of proxy materials. According to the release, the 20-business-day minimum was adopted to accommodate the paper-based, multi-step distribution process then in place. However, the SEC notes that technological advances have substantially shortened the distribution process, and the existing 20-business-day minimum may impose unnecessary delay and uncertainty for transactions and other events. According to the release, the longer interval for conducting a broker search may create opportunities for some market participants to act on that information before public disclosure.

As a result, the SEC proposes to amend Rule 14a-13 to shorten the minimum broker search period from 20 business days to five business days. The proposal would also remove references to annual reports to security holders under Rule 14a-13, which would become obsolete given the proposed elimination of the annual report delivery requirement discussed above.

Contact information on proxy and information statement cover pages; technical and conforming amendments

The proxy modernization proposal would also require including specified contact information on the cover pages of proxy statements and information statements, so investors can more readily obtain additional information. To implement the changes discussed in the proposal, the SEC would update cross-references and terminology across a wide range of rules and forms, including to reflect the elimination of the annual report delivery and Notice of Exempt Solicitation requirements, and would make other non-substantive and technical amendments.

Economic impact

The SEC’s economic analysis concludes that technological developments have substantially displaced the original investor-protection rationales for several legacy requirements and that the proposed amendments would reduce compliance burdens for companies. The SEC also notes that some costs and benefits, such as effects on readability and the informational value of certain disclosures, are difficult to quantify.

Practical impacts for public companies

If the proposals are adopted as outlined, potential impacts to public companies include:

• With the potential rescission of Rule 14a-8, companies seeking to exclude a shareholder proposal from their proxy statement may need to look to state law, and disputes may be resolved in state courts. Companies may also consider including thresholds in their organizational documents that a shareholder must meet before submitting a shareholder proposal.
  
  
• Outside of Texas Business Organizations Code Section 21.373, which incorporates an optional provision allowing certain corporations to establish minimum requirements for shareholder proposals in their organizational documents, state corporate statutes generally do not address restrictions on shareholder proposals. Companies considering amending their organizational documents to provide for such restrictions, including requiring ownership thresholds, are encouraged to engage with state regulators regarding potential regulatory changes to address the gap that could result from a rescission of Rule 14a-8, and with shareholders to help identify approaches more likely to receive shareholder support.
  
  
• With the SEC no longer reviewing the appropriateness of shareholder proposals through the no-action process, exclusion decisions may involve greater uncertainty for companies.
  
  
• Companies are encouraged to assess how, in the absence of Rule 14a-8, a shareholder can properly bring a proposal at a shareholders’ meeting while complying with the company’s laws of incorporation and their organizational documents. In addition, companies must determine whether their bylaws clearly address shareholder proposals outside of Rule 14a-8. Companies may wish to consider the risks and benefits of adopting restrictions related to shareholder proposals in their organizational documents. Any bylaw amendment should be evaluated under applicable state law, including any new regulations adopted in response to the rescission of Rule 14a-8.
  
  
• Companies may need to modify the disclosure in proxy materials to reflect any changes to the shareholder proposal and proxy solicitation process, including deadlines and other requirements for submitting proposals and procedures for submitting shareholder proposals.
  
  
• Companies may have greater ability to exercise their discretionary voting power with respect to certain shareholder proposals if shareholders grant companies such authority, regardless of the shareholder proponent’s solicitation efforts.
  
  
• Shorter deadlines for conducting broker searches or for incorporating documents by reference may provide increased flexibility in planning transactions and annual meetings.
  
  
• Companies may experience reduced costs and less redundancy in preparing materials for their annual meeting with the elimination of the glossy annual report.

Looking ahead

For each proposal, the SEC requests the public to provide comments within 60 days of publication in the Federal Register.

Companies are encouraged to provide feedback regarding the proposals using the SEC’s internet comment form, email, or via paper, referring to File Numbers S7-2026-32 and S7-2026-33 for the Rule 14a-8 rescission proposal and the proxy solicitation modernization proposal, respectively.

Learn more

For more information, please contact the authors.