The SEC has proposed to Rescind Rule 14a-8 would be one of the most consequential changes to shareholder rights in generations. Complete rescission of Rule 14a-8, woiuld repeal the federal rule that has allowed qualifying shareholders to place proposals in company proxy materials for more than 80 years.
Under Release No. 34-106383, File No. S7-2026-32, the SEC proposes to eliminate Rule 14a-8 and leave the role of shareholder proposals largely to state law and company governing documents. At the same time, it proposes amendments to Rule 14a-4 that would expand circumstances in which management could exercise discretionary voting authority over proposals presented at shareholder meetings but omitted from company proxy materials. The comment period will run for 60 days after publication in the Federal Register.
I have already submitted four comment letters. These are initial efforts. I expect to have considerably more to say about the proposal, its implications for shareholder rights and corporate accountability, and the need for investors and others to participate in the rulemaking.
My comments are evolving. The first two were intended to get fundamental objections into the record quickly so that when people look at the SEC’s comment record they will see some of the issues involved. The second two move toward a more formal, carefully documented administrative-law record. If the Commission ultimately adopts the proposal substantially as written, I expect the resulting rule to face judicial challenge. An important task now is therefore not simply to express disagreement but to put evidence, legal authorities, reasonable alternatives, reliance interests, and deficiencies in the Commission’s analysis into the rulemaking record.
Rescind Rule 14a-8: My Initial Comments
- My first comment (Rule 14a-8 comment – 1) lays out the broad case against rescission. I argue that Rule 14a-8 does not create state-law shareholder rights; it provides the federal proxy machinery through which shareholders can practically exercise those rights. I also address reliance interests, federalism, the proposed expansion of management’s discretionary authority under Rule 14a-4, and the practical consequences for ordinary investors who cannot finance their own proxy solicitations.
- My second comment (14a-8 comments -2) focuses more closely on the SEC’s Economic Analysis. I argue that it inadequately accounts for the benefits generated by shareholder proposals, collective-action problems facing dispersed investors, transition costs from dismantling an 80-year-old national system, and market-wide effects. I also question its treatment of discretionary voting authority under Rule 14a-4.
- My third comment (Comments on Rule 14a-8 recession-3) begins the more formal evidentiary phase. It examines the Commission’s statutory-authority argument, SEC v. Transamerica Corp., eight decades of reliance on the federal proxy system, the Commission’s own Economic Analysis, and a narrower alternative to complete rescission. I also put my own experience into the record: proposals frequently produce agreements and governance changes without ever reaching the proxy. That benefit can disappear from an analysis that counts withdrawals primarily as avoided costs.
- My fourth comment (Comments on Rule 14a-8 recession-4) concentrates on Rule 14a-4 and something especially striking in the SEC’s own analysis. The Commission acknowledges that its proposed default could allow management to vote shares because of shareholder inertia or limited attention even when that does not reflect the shareholder’s actual preference—and that this problem is likely to fall disproportionately on retail investors. I argue that an uninstructed share should remain uninstructed unless the shareholder affirmatively delegates voting authority.
Rescind Rule 14a-8: These Four Letters Are Only A Beginning.
Rule 14a-8 has shaped the relationship between shareholders and public companies for generations. Its importance cannot be measured simply by counting proposals that reach a vote. The rule also creates leverage for engagement, negotiation, disclosure, governance reforms, and agreements that often make a shareholder vote unnecessary.
In the coming weeks, I will write much more about what is at stake, weaknesses I see in the SEC’s justification and economic analysis, possible alternatives to outright rescission, and—most importantly—why shareholders, academics, fiduciaries, governance professionals, business representatives, and others who value meaningful shareholder participation need to make their own evidence and experience part of the Commission’s record.
These are my initial thoughts. Much more to come.
Rescind Rule 14a-8: Learn More—and Join the Discussion
The response from investors and shareholder-rights organizations is already taking shape. Readers who want additional analysis, evidence, and opportunities to exchange ideas should follow these organizations. I will update this list as additional responses and formal SEC comments appear.
- Shareholder Rights Group / Investor Rights Forum coalition. This may be especially useful for readers interested in alternatives to outright rescission rather than simply opposition. Before the SEC issued its proposal, the Shareholder Rights Group, Ceres, For the Long Term, ICCR, New York State Comptroller Thomas DiNapoli, and US SIF submitted a detailed rulemaking petition urging the Commission to retain Rule 14a-8 while reforming it. The petition discusses administrative-law alternatives, litigation costs, the no-action process, effects on smaller shareholders, and ways to reduce SEC burdens without abolishing the federal framework. It is an important starting point for anyone preparing a substantive comment for the administrative record.
- Interfaith Center on Corporate Responsibility (ICCR). ICCR responded when the SEC’s rescission plan became public earlier in September, stressing the long history of investor-company engagement under Rule 14a-8 and calling the threatened elimination of the rule a fundamental challenge to shareholder rights. ICCR also maintains an unusually useful Shareholder Rights and SEC Policy page collecting litigation, policy statements, letters, and other resources.
- As You Sow. Its detailed September 16 response addresses Rule 14a-8 together with the proposed changes to Rules 14a-4 and 14a-6. Particularly useful are its discussions of shareholder proposals as a source of risk information, the historical role of proposals in corporate-governance reform, state-law fragmentation, and the cumulative impact of the SEC’s proposed proxy changes. It also urges institutions, pension trustees, and companies to submit comments.
- Council of Institutional Investors (CII). Executive Director Glenn Davis responded directly to the September 16 proposal, arguing that wholesale rescission would replace a national system with a patchwork of state approaches and substantially diminish shareholder participation. CII says it intends to continue speaking publicly in defense of Rule 14a-8.
- Ceres and Freedom to Invest. Their joint response emphasizes Rule 14a-8 as a market mechanism through which investors communicate financially relevant concerns to companies. They argue that rescission would increase costs and instability rather than simply eliminate regulatory burdens.
- Better Markets. Its September 16 statement, SEC Moves to Silence Shareholders, focuses particularly on investor protection and the ability of owners to raise matters for consideration by fellow shareholders.
- New York State Common Retirement Fund / New York State Comptroller Thomas P. DiNapoli. DiNapoli responded on September 16 in his capacity as trustee of the Fund. In addition to opposing rescission, he called on publicly traded companies to continue accepting shareholder proposals and including them in their proxy materials even if the federal requirement disappears.
- One additional piece is worth reading even though it is somewhat different in tone. Frederick Alexander, founder of The Shareholder Commons, argues that eliminating Rule 14a-8 risks destabilizing the longstanding balance between investors and corporate managers, but he also calls on investors and companies to search for a negotiated private-ordering solution rather than retreat into opposing camps. That makes it particularly useful for thinking about alternatives the SEC should consider before wholesale rescission. (Harvard Law Forum)
This debate is only beginning. I encourage readers to read these materials, follow the organizations involved, exchange information about research and arguments that should be brought to the Commission’s attention, and—most importantly—develop comments grounded in evidence that can become part of the SEC’s formal rulemaking record. The SEC Rule 14a-8 rescission proposal and comment portal will become increasingly important as comments arrive.
Please feel free to add comments and point to additional resources in the comment box below… scroll down to find it. Given how quickly CII, As You Sow, Ceres, Better Markets and DiNapoli responded, I expect a considerably larger coalition—and more legally and empirically developed materials—within the next several days.
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