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Now that the Corp Fin Staff has stripped back their process around Rule 14a-8 exclusion requests to no longer offer an option of providing a response to a company’s representation that it has a reasonable basis to exclude the proposal, the inevitable question arises as to what will we say in our Rule 14a-8(j) notices going forward. Meredith recently addressed this issue in the Proxy Season Blog here on TheCorporateCounsel.net. Her blog notes:

Now that Corp Fin has issued its announcement that it will discontinue responding to Rule 14a-8 no-action requests entirely and indefinitely, and no longer respond with a letter indicating that it will not object if a company omits a proposal, companies now know that the process they will follow if they want to exclude a shareholder proposal in the 2027 proxy season will be similar to the 2026 season – but slightly different. This Gibson Dunn blog extrapolates on what Rule 14a-8(j) notices will still include, and what they won’t.

“Companies can expect continued engagement with shareholder proponents as part of their overall shareholder engagement activities, and will need to carefully evaluate any shareholder proposals they receive. As noted above, if a company determines to exclude a proposal because the proposal or proponent has not satisfied Rule 14a-8, the company must still notify the Division and the proponent of its intention to exclude the proposal. However, as the Division will no longer issue a ‘No Objection’ letter, the exclusion notice will not need to include an ‘unqualified representation’ that the company has a ‘reasonable basis’ to exclude the proposal, which is what the Division requested in exchange for the Division’s issuing a ‘No Objection’ letter in the 2025-2026 proxy season.

Under Rule 14a-8(j), the exclusion notice nevertheless should include ‘an explanation of why the company believes that it may exclude the proposal, which should, if possible, refer to the most recent applicable authority,’ and a supporting opinion of counsel when such reasons are based on matters of state or foreign law. That explanation will continue to be closely scrutinized by other shareholders and by proxy advisory firms, as well as by shareholder proponents, and remains subject to potential legal challenge. As such, companies should continue to work closely with inside or outside counsel to assess the merits of their arguments before deciding to exclude a proposal.”

Practices will no doubt continue to evolve as we move through this uncharted territory in the time leading up to the proxy season, and we will keep you apprised of all of the developments. The Proxy Season Blog is available to subscribers of TheCorporateCounsel.net. If you do not have a subscription – which provides access to all of the amazing resources on our website – I encourage you to email info@ccrcorp.com or call 800-737-1271. You will not regret it!

– Dave Lynn