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When I wrote about my shareholder proposal odyssey last month on the occasion of Corp Fin issuing an announcement that it would no longer consider Rule 14a-8 no-action requests, I was touched by how many folks reached out to me to share their own experiences with shareholder proposals, particularly as part of Corp Fin’s shareholder proposal task force. It reminded me yet again of how fortunate I am to be part of such a great “SEC family,” thanks to my shared experience with so many amazing folks who have worked (and continue to work) at the SEC. Thank you all for reaching out!

I noted at the time that I did not intend “my story of my shareholder proposal odyssey as an ode to the Staff’s now cast-aside no-action letter process – rather, it is dirge to an old friend that had outlived its usefulness.” Now, just a few weeks later, Rule 14a-8 faces its inevitable swan song, after the Commission proposed the rule’s rescission last week. The SEC’s proposing release was published in the Federal Register today, and the comment period will run until November 20, 2026.

I would say that the most frequent question that I have received since last Wednesday is: “Are you surprised that the Commission elected to take the drastic step of proposing to rescind Rule 14a-8 in its entirety?” To that question, I have answered “no,” as I think the handwriting has been on the wall ever since Chairman Atkins was appointed, given his longstanding antipathy toward the rule. Further, even before the political winds significantly shifted more than two years ago now, I argue that Rule 14a-8 was in a state of decline, as the proposals submitted under the rule veered toward the fringes of relevance to stockholders, while the Staff’s interpretations of key exclusions in the rule became more and more politicized. While Rule 14a-8 has certainly played an important role in the overall landscape of shareholder engagement, one cannot ignore the fact that its relevance and reliability has been tested in recent years.

The second most frequent question that I have received over the past five days is: “What happens next, assuming the SEC rescinds the rule?” In response, I think that it is worth noting that it seems unlikely that the Commission could act quickly enough to rescind Rule 14a-8 before the 2027 proxy season is upon us, given that the comment period for the proposing release runs until late November. This leaves us with the prospect of one last act for Rule 14a-8, once again without the involvement of the Staff in the exclusion process. As for the contours of that last act, I would definitely warn “buckle up,” because I don’t think that the usual shareholder proponents are the type to “go gentle into that good night!”

Once we get past the death throes of the 2027 proxy season and assuming that the Commission ultimately acts to rescind Rule 14a-8, there are numerous outcomes that we can anticipate. The rescission of Rule 14a-8 does not mean an end to shareholder proposals, just an end to relatively easy and costless shareholder proposals. Proponents seeking to advance their proposals at annual meetings will need to comply with company advance notice requirements and conduct their own solicitations, which will certainly add to the cost and complexity of pursuing a shareholder proposal. Much like what we saw in the aftermath of the mandatory proxy access debacle when the SEC adopted Rule 14a-11 (which was subsequently vacated by a federal court), “private ordering” could unfold following the rescission of Rule 14a-8 as companies could be strong-armed into facilitating proposals from shareholders in a manner similar to proxy access bylaws for director nominees. Further, we could see the states step up to the plate with legislation that could create processes similar to Rule 14a-8 (or taking different approaches) in order to fill the void left by a rescinded Rule 14a-8. It remains to be seen what exactly what those laws could look like and how such measures would interact with the federal regulation of proxy solicitations.

The third most frequent question that I have received since last Wednesday is: “What do you think the comment process will look like for this proposal?” On that front, I think we can all agree that there will be pointed comments on both sides of the debate, and the image that comes to mind is trench warfare from World War I. It seems likely that the shareholder side and the corporate side will retire to their respective trenches and there is unlikely to be any middle ground reached in the midst of the debate. While I hate to hear myself say this, I don’t think the comment process is going to be effective in swaying the Commission in any particular direction other than moving toward rescission, so in a way it seems like a pointless exercise at this juncture.

Finally, as we have seen with so many other rulemakings (including the aforementioned adoption of Rule 14a-11), the SEC’s actions on controversial rulemakings often end up being reviewed in the federal courts and one can certainly envision a scenario where the Commission’s effort to rescind Rule 14a-8 will find its way to the desks of U.S. Court of Appeals judges. In its proposing release, the Commission raises an interesting argument that the SEC’s authority over the proxy solicitation process is not as plenary as I was taught to believe, which in my mind could pull on a thread that threatens to unravel the entire sweater that is the SEC’s regulation of proxy solicitations. I will be breaking out the popcorn to watch how all of that plays out!

– Dave Lynn