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SEC proposes rescission of shareholder proposal rule
17 September 2026 US
Image: lazyllama/stock.adobe.com
The US Securities and Exchange Commission (SEC) has issued rescission and reform proposals related to proxy rules under the Securities Exchange Act of 1934.
The first proposal is to rescind Rule 14a-8 under the Securities Exchange Act of 1934, which the Commission says exceeds its scope of statutory authority and intrudes into matters of state law.
Rule 14a-8 outlines requirements surrounding shareholder proposals, which the Commission explains many of the justifications for adopting the rule have not been substantiated in practice or are less compelling today.
It furthers the rule has produced unintended consequences, and that rescinding Rule 14a-8 would leave determinations about the role of shareholder proposals to state law and company governing documents.
The Commission outlined independent policy reasons for the proposal of the rescission.
Amendments to Rule 14a-4(c) under the Exchange Act is the other proposal put forward by the Commission, which relates to a proxy’s discretionary authority to vote on seven different matters presently outlined.
Proposed amendments to the rule would provide companies with greater flexibility and grant shareholders greater control “regarding proposals for which a company may seek discretionary proxy voting authority”, explains the Commission.
The Commission states it also separately proposed rule amendments to modernise the proxy solicitation process, reflecting advancements in technologies and current realities of shareholder communications.
In a statement, SEC chairman Paul S. Atkins says: “The proposals reflect two of my highest regulatory priorities. First, ensuring that the Commission does not improperly intrude into state corporate law when applying the federal securities laws.
“Second, updating the Commission’s rules to reflect developments in market practice and technology, and other innovations, since the rules’ adoption or last amendment.”
The first proposal is to rescind Rule 14a-8 under the Securities Exchange Act of 1934, which the Commission says exceeds its scope of statutory authority and intrudes into matters of state law.
Rule 14a-8 outlines requirements surrounding shareholder proposals, which the Commission explains many of the justifications for adopting the rule have not been substantiated in practice or are less compelling today.
It furthers the rule has produced unintended consequences, and that rescinding Rule 14a-8 would leave determinations about the role of shareholder proposals to state law and company governing documents.
The Commission outlined independent policy reasons for the proposal of the rescission.
Amendments to Rule 14a-4(c) under the Exchange Act is the other proposal put forward by the Commission, which relates to a proxy’s discretionary authority to vote on seven different matters presently outlined.
Proposed amendments to the rule would provide companies with greater flexibility and grant shareholders greater control “regarding proposals for which a company may seek discretionary proxy voting authority”, explains the Commission.
The Commission states it also separately proposed rule amendments to modernise the proxy solicitation process, reflecting advancements in technologies and current realities of shareholder communications.
In a statement, SEC chairman Paul S. Atkins says: “The proposals reflect two of my highest regulatory priorities. First, ensuring that the Commission does not improperly intrude into state corporate law when applying the federal securities laws.
“Second, updating the Commission’s rules to reflect developments in market practice and technology, and other innovations, since the rules’ adoption or last amendment.”
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