SEC Decision to Permanently Abandon No-Action Process Leaves Companies and Shareholders in Uncharted Waters
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Ryon Harms, [email protected], (310) 730-9407
EL CERRITO, CALIFORNIA — AUGUST 19, 2026 — The SEC’s announcement that its Division of Corporation Finance will permanently end its process for deciding no-action request challenges under Rule 14a-8, leaves both companies and investors in uncharted waters. It deprives companies and proponents alike of an orderly, time-honored process that has functioned as a neutral referee for decades.
“Shareholder engagement has encouraged countless companies to adopt governance policies now recognized as best practices and as essential to long-term value creation,” said Andrew Behar, CEO of As You Sow. “The SEC has decided to end the orderly and mutually beneficial process under the guise of saving issuers time and money. This decision sweeps under the rug the full range of costs associated with dismantling this program which supported good governance, reduced uncertainty and costs for shareholders and companies alike, and supported a stronger, more stable market.”
For decades, the Division staff’s review of no-action requests considered both the company’s request and the proponent’s response and decided to which both sides adhered. It obviated the need and costs of going to court, while ensuring that corporate and concerns were heard.
“Shareholder oversight reduces financial risk,” added Behar. “These resolutions are essentially a way to raise new ideas to help companies reduce risks and see blind spots. Now, as the SEC itself acknowledges, only the courts can determine whether these innovative ideas will be openly discussed.”
“This shift not only harms shareholders and their right to raise issues to boards and management through non-binding proposals, but leaves corporations in a difficult position,” said Danielle Fugere, President and Chief Counsel of As You Sow. “A company that unilaterally omits a proposal not only threatens its relationship with its own shareholders but creates real legal exposure.”
Despite the SEC’s announcement As You Sow remains fully prepared to engage in dialogue and to withdraw proposals when common ground is found. As New York State Comptroller Thomas DiNapoli recently argued in letters to portfolio companies, engagement with shareholders is sound governance that builds mutual understanding and trust. Any company filing an exclusion notice should welcome and evaluate the proponent’s response, including the validity of the exclusion claim, and reconsider before taking the risky step of omitting a resolution.
In this new uncertain environment, investors are being forced to consider alternatives when proposals are unilaterally excluded. In the 2026 proxy season, many major investors voted against the directors of companies that omitted resolutions. In 2027, this trend may increase and some may choose to present their proposals from the floor of the shareholder meeting. Others may publicly highlight the risk that these companies are undercutting shareholder value and sidelining their own investors by disregarding long-standing governance norms. And, as the staff itself reminds proponents in every no-action response, a proponent can pursue legal action in federal court. Many shareholders, including As You Sow, have demonstrated their willingness to go to court where necessary.
“Shareholders would prefer not to go down the road of these alternatives,” added Fugere. “We continue to believe that the information sharing, dialogue, and opportunity for a win-win agreement that is facilitated by the shareholder proposal process serves the best interests of companies, investors, and an informed and well-governed market. While the shareholder proposal process and ‘no-action’ filings do take an investment of time and energy by all parties, given the value of the U.S. market and the seriousness of the issues raised, it is a small amount for the value it brings, especially compared to litigating these issues. The best possible outcome would be for the SEC to return to its established mandate to protect investors and companies through the no-action process.”
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As You Sow is the nation’s leading shareholder representative, with a 30+ year track record promoting environmental and social corporate responsibility. As You Sow addresses a range of issues that affect shareholder value including climate change, ocean plastics, toxins in the food system, biodiversity, racial justice, and workplace diversity. See As You Sow’s shareholder resolution tracker.