---
title: The SEC Moves to Scrap the 1942 Rule That Puts Shareholder Proposals on Company Ballots
description: The SEC has proposed rescinding Rule 14a-8, the 1942 rule that lets shareholders put proposals on company ballots, handing the question to state law.
author: Darie Nani (Editor-in-Chief)
date: 2026-09-18T10:32:53.616Z
updated: 2026-09-18T10:32:53.634Z
canonical: https://www.sovereignmagazine.com/article/sec-proposes-rescind-rule-14a-8-shareholder-proposals
image: https://cdn.nanimediahouse.com/sec-headquarters-shareholder-rule-311395.webp
categories: Markets
content_type: News
region: United States
publication: Sovereign Magazine
schema_type: Article
---

The Securities and Exchange Commission proposed on September 16, 2026, to rescind Rule 14a-8, the provision that since 1942 has guaranteed qualifying shareholders a place for their proposals in a company's proxy materials. Repealing it would remove the federal requirement that lets an investor put a resolution to a vote at the annual meeting, and hand the rules governing shareholder proposals to state law and to companies' own charters and bylaws. The move drew immediate objection from large institutional investors and support from business groups, and it is not final: the Commission opened the plan to public comment before it can be adopted.

The SEC issued two proposing releases the same day, one to rescind Rule 14a-8 together with an amendment to a related provision, Rule 14a-4(c), and a separate release to modernize the proxy solicitation process. The comment periods on both run for 60 days after the releases are published in the Federal Register.

## The SEC says the rule exceeds its legal authority

The Commission said Rule 14a-8 reaches beyond its statutory authority and intrudes into matters of state law. It argued that many of the original justifications for the rule have not held up in practice or matter less today, and that the rule has had unintended consequences, among them an implied federal preemption that may have discouraged states from writing their own laws on shareholder proposals.

Chairman Paul Atkins called the two proposals among his highest regulatory priorities. Atkins argued that Congress has never authorized the Commission to decide which matters are a proper subject for a shareholder vote, and that without that authorization the SEC has no such power. That question of corporate governance, he said, belongs to the state where a company is domiciled. Rescinding the rule, Atkins added, would give states both the legal clarity and the incentive to build their own shareholder-proposal frameworks as they compete to attract companies.

The Commission estimated the change would save companies roughly $39.6 million a year.

## The rule has guaranteed a ballot slot since 1942

Under the rule, a company must carry a qualifying shareholder's proposal in its proxy statement and on the proxy card so that every shareholder can vote on it, which spares the proponent the cost of drafting and mailing a separate set of proxy materials. Without the rule, there is no federal requirement to carry those proposals at all, and the role of shareholder proposals, along with the rules for filing them, would be left to state law and to each company's governing documents.

The companion change to Rule 14a-4(c) would affect a shareholder who bypasses the company and runs an independent solicitation. Under the amendment, a company could still exercise discretionary voting authority over the proxies it collects, provided it discloses the omitted proposal and its own voting intentions and gives shareholders a box to withhold that authority.

## Investors and companies split over the plan

The U.S. Chamber of Commerce said activist investors have used Rule 14a-8 to push their own agendas at the expense of public companies. Commissioners Hester Peirce and Mark Uyeda support the proposals.

The Council of Institutional Investors, a nonpartisan association of U.S. asset owners made up mainly of pension funds whose members hold trillions of dollars in assets, opposed the change. Its executive director, Glenn Davis, called the proposed rescission "a solution in search of a problem" and warned that the resulting state-law patchwork "will launch a new race to the bottom in state corporate law." Davis said "Most publicly traded companies face zero shareholder proposals in a given year" and that "Nearly all shareholder proposals are non-binding," so their main effect is to give directors better-informed data.

The nonprofit As You Sow said the proposals [would undermine property rights and trust in public markets.](https://www.asyousow.org/press-releases/2026/9/16/sec-proposals-to-silence-shareholders-would-undermine-property-rights-and-trust-in-public-marketsnbsp) The law professor Ann Lipton warned that without the rule, a shareholder who wanted a vote might have to pay for an independent solicitation, a cost she estimated could reach $20,000, which she said would effectively silence smaller investors.

Nothing changes for this year's proxy season unless and until the Commission adopts a final rule.

## FAQ

**Q: Has the SEC already changed how shareholder proposals work?**
Yes. Before this proposal, the SEC's staff had stepped back from the process that let companies ask whether they could keep a proposal off the ballot. The staff began winding down that no-action review in late 2025 and, by August 14, 2026, had stopped answering those requests under Rule 14a-8 altogether.

**Q: Which states would set the rules if the federal one goes away?**
The rules would follow the state where a company is incorporated, and states already compete to attract incorporations. As You Sow warns that some states have moved to favor corporate insiders over ordinary shareholders, pointing to Texas, which has set share-ownership thresholds that limit who may file a proposal.

**Q: Who can file a shareholder proposal today?**
Under the current rule, a shareholder who meets the SEC's minimum ownership and holding-period requirements can submit a proposal for inclusion in the company's proxy materials.

**Q: What happens to shareholder proposals if the rule is rescinded?**
There would be no federal guarantee that a company includes them. A shareholder who wanted a vote might have to run an independent solicitation, which law professor Ann Lipton said could cost up to $20,000. Supporters say state law and company charters would fill the gap; opponents say the result would be an inconsistent state-by-state patchwork.

**Q: What else is in the separate proxy-solicitation release?**
Beyond rescinding Rule 14a-8, the SEC proposed to modernize its proxy-solicitation rules. The changes would cut the minimum broker-search period before a shareholder meeting from 20 business days to 5, remove the requirement to file Notices of Exempt Solicitation, and drop the separate annual-report and stock-performance-graph disclosures for most companies.

**Q: Could the SEC just amend Rule 14a-8 instead of scrapping it?**
Atkins acknowledged the rule could be refined rather than repealed, for instance by changing the ownership thresholds to file a proposal or clarifying what counts as ordinary company business. The Commission instead chose to propose removing it entirely and leaving the matter to state law.