Summary
This morning, the Division of Corporation Finance of the Securities and Exchange Commission announced that it has determined to discontinue responding to all Rule 14a-8 no-action requests effective immediately. The current approach generally represents a continuation of the SEC’s approach for the 2025-2026 proxy season,[1] with the main differences being that the Division will (1) apply a no-review approach across all exclusionary bases, including to requests under Rule 14a-8(i)(1) for being improper under state law, and
(2) no longer issue responses even if a company requests one from the Division and provides an unqualified representation.[2] In addition, companies intending to exclude shareholder proposals must continue to notify the Commission and proponents and submit the notice through the Shareholder Proposal Form, but the Division’s shareholder proposal email address (often used for additional correspondences from companies and proponents) will no longer be functional.
Today’s announcement also stated that the Division of Investment Management, which is responsible for reviewing Rule 14a-8 requests related to investment companies, will take a substantially similar approach.
Implications for Market Participants
The Division’s 2025-2026 approach had meaningful implications on the prior proxy season, including resulting in six lawsuits filed by shareholder proponents challenging issuers’ exclusions of Rule 14a-8 proposals. Today’s announcement marks a further extension of that approach and is likely to result in further additional litigation and uncertainty. In addition, it remains to be seen the full extent to which the SEC’s planned proposal to modernize the requirements of Rule 14a-8 will impact the engagement between companies and shareholders in the upcoming proxy season.
[2] Under the 2025-2026 approach, if a company or its counsel included “an unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions,” and the Division would respond with a letter indicating that, based solely on the representation, the Division will not object if the company omits the proposal from its proxy materials.