The Division of Corporation Finance of the Securities and Exchange Commission (SEC) will require notice only for the exclusion of most Rule 14a-8 shareholder proposals, except for no-action requests to exclude a proposal under Rule 14a-8(i)(1) (proposals improper under state law). The Staff cited the significant backlog caused by the government shutdown and recent developments regarding precatory proposals for its decision to focus solely on Rule 14a-8(i)(1) no-action requests for the current proxy season.

Key Takeaways

• No-Action Relief Only Required for Rule 14a-8(i)(1) Justification. Going forward, the Staff will only express views on no-action requests to exclude shareholder proposals under Rule 14a-8(i)(1) as “improper under state law.” No-action relief requested pursuant Rule 14a-8(i)(1) will follow the traditional process.
• Applies to Current Proxy Season. This limited review applies to the current proxy season (October 1, 2025 through September 30, 2026) and pending no-action requests submitted before October 1, 2025.
• Must Still Notify if Excluding Proposals under Other Grounds. Companies intending to exclude shareholder proposals on other grounds (i.e., not Rule 14a-8(i)(1)) must still notify the Staff of such intent no later than 80 days prior to filing their proxy statements.
• Content and Process for Notification. Such notice must be limited to (i) the information required by Rule 14a-8(j) and (ii) “an unqualified representation that the company has a reasonable basis to exclude the proposal.” Companies should submit their notices through the online Shareholder Proposal Form.
• Staff Response Not Required for Exclusion. If requested, the Staff will reply acknowledging receipt of such notice and stating it will not object if the proposal is omitted, but will not respond substantively. Such Staff responses are not required to exclude a non-Rule 14a-8(i)(1) shareholder proposal.

Background

On November 17, 2025, the Staff (Staff) of the SEC Division of Corporation Finance (Division) released a statement titled “Statement Regarding the Division of Corporation Finance’s Role in the Exchange Act Rule 14a-8 Process for the Current Proxy Season” (Statement). According to the Statement, for the 2025-2026 proxy season, the Staff will only express views on no-action requests to exclude a shareholder proposal under Rule 14a-8(i)(1). The Staff explained that such limited review is necessary due to a backlog of registration statements and other time-sensitive filings submitted during the recent government shutdown, as well as “developments regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals.”

The Staff clarified that all companies seeking to exclude shareholder proposals must still notify the Division of such intent, regardless of the basis of exclusion sought. If a company wishes to receive a response to a non-Rule 14a-8(i)(1) exclusion request, it 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 Staff will respond to such notifications with a letter indicating that “based solely on the company’s or counsel’s representation, the Division will not object if the company omits the proposal from its proxy materials.” The Staff will not evaluate the adequacy of the company’s representation or express a view on the company’s exclusionary basis or bases in such response. Justifying this entirely new approach to excluding shareholder proposals, the Staff emphasized that an “extensive body of guidance from the Commission and the Staff” remains available to companies in drafting such notices, while also highlighting that such guidance is not binding.

This limited review applies to the current proxy season (October 1, 2025 through September 30, 2026), as well as pending no-action requests submitted prior to October 1, 2025. Companies with pending requests seeking exclusion other than through Rule 14a-8(i)(1) should submit the notice described above, and the time of their initial submissions will apply for purposes of the Rule 14a-8(j) 80-day requirement.

Rule 14a-8(i)(1) and Precatory Proposals: Overview and Recent Developments

“Precatory proposals,” or proposals calling for actions that are not binding on the company if approved, are governed by both Rule 14a-8 and state law. Rule 14a-8 sets forth the procedural requirements for excluding such proposal, but state law determines whether a proposal is “proper” for action by shareholders in the first place. If a proposal is improper under state law, Rule 14a-8(i)(1) permits companies to exclude such proposals from their proxy statements. While the determination of whether a proposal is “proper” is solely governed by state law, the accompanying note to Rule 14a-8(i)(1) states that the Staff “will assume that a proposal drafted as a recommendation or suggestion is proper unless the company demonstrates otherwise.”

There is ongoing debate whether precatory proposals are “proper” under Delaware law. In a recent speech, Chairman Paul S. Atkins echoed the view that precatory proposals may not be “proper” because Delaware law “does not confer to stockholders an inherent right to vote on precatory proposals.” Chairman Atkins noted that “if there is no fundamental right under Delaware law for a company’s shareholders to vote on precatory proposals—and the company has not created that right through its governing documents” and a company argues “that a precatory shareholder proposal submitted to a Delaware company is excludable under paragraph (i)(1) of Rule 14a-8,” he has “high confidence” that the Staff would honor that position.

The Staff acknowledged this ongoing uncertainty in the Statement, noting that “there is not a sufficient body of applicable guidance for companies and proponents to rely on” when seeking to exclude precatory proposals. As such, these proposals remain subject to the traditional Rule 14a-8 no-action review process and will receive substantive responses from the Staff.

What This Means for Companies

The practical impacts of the Division’s decision to allow exclusions for almost all shareholder proposals this proxy season will be broad and fundamentally change the dynamics of the typical negotiations and outreach between shareholder proponents and public companies. The vast majority of no-action requests are based on “a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions.” 

Companies seeking to exclude shareholder proposals, regardless of the grounds for exclusion claimed, must still notify the Staff of such intent through the Shareholder Proposal Form.