November 17, 2025
Today the Securities and Exchange Commission Division of Corporation Finance announced that for the coming proxy season, it will not issue informal staff determinations on the merits of most shareholder proposal no action requests. See https://www.sec.gov/newsroom/speeches-statements/statement-regarding-division-corporation-finances-role-exchange-act-rule-14a-8-process-current-proxy-season
• The SEC has essentially announced that it will not enforce its own rules. The no action process and staff determinations regarding whether or not a proposal is excludable is a longstanding SEC rule.
• In October SEC Chairman Paul Atkins announced in a speech that he believes advisory shareholder proposals (which constitute 98% of shareholder proposals filed at US public companies) are not proper under Delaware law. This is a novel and untested theory and inconsistent with the Commission's own rules which say that advisory proposals are presumed to be proper unless a company demonstrates otherwise. The Chairman reversed the presumption without going through any process such as notice and comment required by the administrative procedure act. Notably the announcement invites companies to submit requests on this new theory and states that these are the ONLY no action challenges that the staff will respond to. This is an extreme approach and open door to openly inviting companies to seek decisions that would effectively block all advisory proposals, reversing decades of precedents and progress achieved through the proposal process. See our additional discussion at https://www.shareholderrightsgroup.com/2025/11/the-sec-delaware-and-high-stakes-for.html
• The informal rulings issued by staff give companies a level of comfort that the SEC will not take enforcement action against them if they exclude proposals from the proxy statement. However SEC has now stated that it will not take enforcement action and will take a company's word for it that a proposal is excludable as long as the company believes it has a good reason for doing so.
• In the absence the informal rulings, the only legal recourse for shareholders is to sue the company to force them to include the proposal after receiving a notice of intent to exclude. This creates significant new uncertainty for companies and investors. The uncertainty for companies is compounded by governance implications of excluding proposals without an informal SEC ruling on the merits. Such a company may still expect significant governance repercussions. Excluding a proposal in the absence of a determination by the SEC may lead to votes against board of directors and souring of relations with investors.
• A responsible governance approach by companies would be, regardless of this opening, to welcome the opportunity for engagement and receiving shareholder votes rather than unilaterally omitting a proposal.
Sanford Lewis
Director and General Counsel
Shareholder Rights Group