Notices still required via SEC’s online submission portal; companies have a choice

Companies must still notify the SEC and proponents of plans to exclude shareholder proposals from their proxy materials within 80 calendar days before filing a definitive proxy statement, pursuant to Rule 14a-8(j). For the 2026 proxy season, companies now have a choice: They may submit the Rule 14a-8(j) notice, which will be informational only and not elicit any SEC response, or they may request a response from the SEC. Again, a response is not legally required, but the SEC acknowledged that companies may prefer to receive such a response, even if it has limited legal effect on the company. If an SEC response is desired, companies must include “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.” The SEC will respond with a letter indicating that the Division of Corporation Finance will not object to the exclusion, but the SEC will not evaluate the adequacy of or express an opinion on the exclusion.

It is worth noting that the SEC stated that a company may have a “reasonable basis” to exclude a proposal if there is no precedent no-action guidance on point or even if there is adverse no-action guidance where the staff has been unable to concur with a company’s view to exclude a particular proposal. The ability to revisit prior staff guidance, which is nonbinding and reflects only informal staff views, may embolden companies to exclude shareholder proposals so long as they have a reasonable basis for doing so.

For an informational only notice, we would not expect companies to include more than the name of the proponent, the date on which the proposal was received, and the company’s procedural and/or substantive bases for exclusion. No further support would be required or expected by the SEC.

For companies seeking a “no objections” response, we anticipate that practice may differ depending on the company and the level of public scrutiny that exclusion of the shareholder proposal is expected to raise. Companies generally submit lengthy and comprehensive legal analyses to support the position that a proposal may be excluded from a proxy statement under one or more of the substantive bases for exclusion provided in Rule 14a-8. In its November announcement, the SEC made clear that companies seeking a “no objections” response only need to include an “unqualified representation” that they have a reasonable basis to exclude the proposal based on judicial or SEC precedent, including no-action letter precedent. As a result, given that these letters will be made public, the decision to include lengthy legal analyses in these submissions will likely turn on potential litigation and investor relations concerns and not on a desire to persuade the SEC staff.

SEC will continue to provide substantive review of requests to exclude under Rule 14a-8(i)(1)

Due to remaining questions about how state law and Rule 14a-8(i)(1) apply to precatory (nonbinding) proposals, the SEC will continue to review and express its views on no-action requests under Rule 14a-8(i)(1) that seek to exclude proposals that are improper under state law. In its November announcement, the SEC explained that this exception is due to recent developments regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals, which are drafted as recommendations to the board and do not require the board to take action even if approved by shareholders.

In a recent speech, SEC Chair Paul S. Atkins referred to statements by Delaware experts suggesting that Delaware law does not confer on stockholders an inherent right to vote on nonbinding or “precatory” proposals. Chair Atkins expressed that if there is no fundamental right under Delaware law for a company’s stockholders to vote on precatory proposals and the company has not created that right through its governing documents, then there may be an argument that a precatory proposal submitted to a Delaware company is excludable under Rule 14a-8(i)(1). In his speech, Chair Atkins said that if a company obtains an opinion of counsel that precatory proposals are not a proper subject for stockholder action under Delaware state law, then he has “high confidence that the SEC staff will honor that position.”

Conclusion

The SEC’s November announcement represents its significant withdrawal from the dispute between companies and shareholders over who should have access to the topics for discussion at annual shareholder meetings. Shareholders remain able to bring lawsuits against companies that seek to exclude their proposals in the company’s proxy statements. And they may continue to exert public pressure on companies that refuse to acknowledge shareholder requests. But the question for the 2026 proxy season will be who benefits more from the SEC’s decision to step back from its traditional role of informal arbitrator of these disputes? Does the SEC’s 2026 policy make it easier for companies to ignore shareholders? Or does the lack of traditional SEC no-action letter support make it easier for shareholders to attack companies in court?

Companies anticipating shareholder proposals for the 2026 proxy season should continue to monitor developments in this space, including any early litigation by proponents, especially with respect to attempts to exclude proposals under Rule 14a-8(i)(1). It will also be critical to watch how this change impacts the settlement strategy of proponents. Will they be inclined to approach companies with more reasonable proposals or to “settle” more quickly with companies? Or will they be emboldened by the absence of the SEC this proxy season to take more aggressive positions?

If you have any questions about the SEC’s announcement, please reach out to your regular McDermott Will & Schulte lawyer or a member of the firm’s Capital Markets & Public Companies Group.

Lexi Evangel, a law clerk in the Boston office, also contributed to this article.