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Background: SEC’s No‑Action Process for Shareholder Proposals

Here’s the twist: companies typically ask SEC staff if they can exclude a shareholder proposal from the proxy. Historically, the Division of Corporation Finance has responded through the Rule 14a‑8 “no‑action” process, shaping what investors actually see on the ballot. According to the SEC’s latest statement, that traditional back and forth is changing this season.

Key Policy Change for 2025–2026 Proxy Season

On November 17, 2025, the Division announced it will not respond to most no‑action requests this season. Crucially, it will keep reviewing only those requests invoking Rule 14a‑8(i)(1) on state‑law grounds. As the SEC put it, “the Division has determined to not respond to no‑action requests… other than… under Rule 14a‑8(i)(1).”

Rationale: Resource and Timing Constraints

What no one is mentioning: this is largely about bandwidth. The SEC cites “resource and timing considerations” tied to a lengthy government shutdown and heavy filing volumes. Therefore, staff will prioritize where the legal stakes are highest and rely on existing guidance for the rest.

Scope and Effective Period of the Policy

You might be surprised that the change applies across the entire season. The window runs from October 1, 2025 through September 30, 2026. Moreover, it also covers pending no‑action requests received before October 1, 2025 that did not yet receive a response.

Procedural Requirements for Companies

Companies still must file a Rule 14a‑8(j) notice at least 80 days before the definitive proxy. Additionally, where a company includes an unqualified representation that it has a reasonable basis to exclude, the Division will issue a letter saying it “will not object.” However, staff “will not evaluate the adequacy of the representation.”

Exception for State Law and Precatory Proposals

The Division carved out Rule 14a‑8(i)(1) for continued staff review. In light of recent developments involving state law and how (i)(1) may apply to precatory proposals, the SEC says staff will still express views there. Consequently, companies and proponents should expect normal staff engagement on those state‑law disputes.

Impact and Criticism from Stakeholders

The market read was immediate: activists may have a tougher path this year. Without staff views on the most common bases for exclusion, proponents could face more costly court fights or tougher negotiations. Meanwhile, investor advocates criticized the move as tilting the field toward issuers.

Commissioner Caroline Crenshaw, a Democrat, publicly opposed the shift. She argued the approach favors companies and undermines shareholders’ ability to influence governance. Furthermore, she flagged that staff may issue “no objection” letters based solely on company representations, without substantive review.

Still, companies will welcome faster resolution in many cases. They can proceed after filing the required notice and making the necessary representation, without waiting for staff to opine. Yet the litigation risk could rise if investors challenge exclusions in court.

Parallel Approach for Investment Companies

The Division of Investment Management will use a substantially similar process for funds this season. Therefore, investment companies should plan around the same timing, exception, and representation dynamics. As a result, the entire 14a‑8 ecosystem will feel the shift, not just operating companies.

What this means now

For issuers, document the record early, and be precise in Rule 14a‑8(j) notices. For proponents, expect fewer advisory signposts from the SEC and budget for alternative paths. Finally, watch the (i)(1) docket; those staff views may shape the season’s boundaries.

What to watch next

• Will courts become the de facto arbiter for close calls this season?
• Do companies test more exclusions given the non‑substantive “no objection” option?
• Does the SEC revisit this approach if filings spike or court challenges proliferate?

Bottom line: the SEC is narrowing where it weighs in, at least for now. Consequently, proxy‑season power will shift toward boardrooms and courtrooms. But the (i)(1) carve‑out ensures the agency still speaks where state law could decide the vote.

Disclaimer: This article is for informational purposes only and does not constitute investment, legal, or tax advice.