The SEC’s New Stance on Shareholder Proposals and What it Means for Companies

In today’s episode of Womble Perspectives, we’re diving into a major shift announced by the SEC’s Division of Corporation Finance on November 17, 2025. One that’s already sending ripples through this year’s proxy season.

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• SEC Alters Shareholder Proposal Landscape

About the authors

• Gary R. DePalo
• Sid Shenoy

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

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Host 1:

In today’s episode of Womble Perspectives, we’re diving into a major shift announced by the SEC’s Division of Corporation Finance on November 17, 2025. One that’s already sending ripples through this year’s proxy season.

Host 2:

That’s right. The Division has decided it will no longer respond to most no-action requests seeking to exclude shareholder proposals, except those argued as “improper under state law” under Rule 14a-8. This is a big departure from their usual practice and has serious implications for companies preparing proxy materials.

Host 1:

So, why the change? A backlog of registration statements and filings caused by the extended federal government shutdown. Combine that with limited resources and timing constraints, and the Division is essentially narrowing its focus to just one exclusion basis under Rule 14a-8.

Host 2:

And that one basis is getting special attention because of recent developments that left companies and shareholders unclear about what’s permissible. A footnote in the Division’s statement even references a speech by Chairman Paul Atkins, suggesting there’s no fundamental right under Delaware law for shareholders to vote on precatory proposals.

Host 1:

Meanwhile, the Division says there’s already “extensive guidance” on all other exclusion bases under Rule 14a-8. So, they’re stepping back from reviewing those, and trusting companies to rely on existing precedent and judicial decisions.

Host 2:

That said, this doesn’t change the requirement under the Rule. Companies still have to notify the SEC and the proposal’s proponent at least 80 days before filing their definitive proxy statement. And they still need to use the SEC’s Shareholder Proposal Form.

Host 1:

So, if a company includes an “unqualified” statement in its notice, saying it has a reasonable basis to exclude a proposal based on the rule, prior guidance, or court decisions, the Division will issue an acknowledgment letter. That letter essentially says, “We won’t object,” based solely on the company’s representation.

Host 2:

It’s a subtle but powerful shift. Companies now have more autonomy, but also more responsibility. They’re encouraged not to feel bound by past staff responses that didn’t support exclusion. Or by the absence of such responses.

Host 1:

This new approach applies to the current proxy season, which runs from October 1, 2025, through September 30, 2026. It also covers any pending no-action requests received before October 1 that haven’t yet been reviewed.

Host 2:

And the Division says it will keep reviewing requests until there’s “sufficient guidance” to help companies and shareholders make informed decisions. So, we’re in a transitional phase, one that could redefine how shareholder proposals are handled going forward.

Host 1:

It’s an unexpected development, and one that legal teams, investor relations, and corporate governance professionals will need to watch closely.

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