SEC Proposals to Silence Shareholders Would Undermine Property Rights and Trust in Public Markets
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Ryon Harms, [email protected], (310) 730-9407
EL CERRITO, CALIFORNIA — September 16, 2026 — The Securities and Exchange Commission today proposed to rescind Rule 14a-8, the rule that has governed the inclusion of shareholder proposals in company proxy materials since 1942, along with amendments to Rule 14a-4 and the elimination of Rule 14a-6's Notice of Exempt Solicitation. As You Sow, the nation’s leading shareholder representative, underscores that the proposals would remove one of the most effective and least expensive risk-detection mechanisms in American capital markets, at a cost borne not by advocacy organizations but by every investor who owns a share of a public company.
“This is not a loss for any one organization; it is a loss for the free market,” said Andrew Behar, CEO of As You Sow. “Shareholder proposals are the most efficient and inexpensive form of risk intelligence a board will ever receive. They arrive early, in writing, from the people whose capital is at stake, and they cost a company almost nothing to read and engage. Killing the canary does not make the mine any safer.”
Rule 14a-8 is not a niche instrument. Independent board directors, annual elections for boards, and advisory votes on executive compensation were all advanced through shareholder proposals before becoming mainstream governance practice across the U.S. market. Each strengthened accountability and improved alignment between executives and long-term owners without new legislation or regulatory mandate. A recent academic study of nearly 10,000 shareholder proposals at S&P Composite 1500 firms found that board responsiveness to proposals can enhance firm value.
The mechanisms the Commission proposes to eliminate are, in other words, a process for shareholders to propose, understand, and vote on shareholder proposals which have produced much of the governance architecture on which current valuations and the free market rest, while also helping companies and shareholders to collectively act to reduce risk and to deliver increased company value.
“The Commission’s position is that it has lacked authority for this rule since 1942,” said Danielle Fugere, President and Chief Counsel of As You Sow. “That is a remarkable conclusion to reach after 84 years of administering the rule, defending it successfully in federal court, and amending it repeatedly with Congress fully aware of its existence. In 1934, Congress federalized proxy regulation precisely because state law had proven inadequate to protect dispersed shareholders.”
The Commission frames rescission as restoring state authority and describes the current competition among states for corporate domicile as a reason to act now. But companies select their state of incorporation; their shareholders do not. Delaware, Texas, and Nevada have all recently amended their corporate codes to strengthen the position of corporate insiders relative to ordinary shareholders, and Texas has imposed share ownership thresholds that restrict who may file a shareholder proposal or a derivative suit at all.
For a diversified investor, a single national standard would be replaced by up to fifty separate frameworks, most of which do not yet exist, adjudicated in fifty separate court systems at the investor’s expense. It is fragmentation with a built-in incentive for companies to relocate toward whichever regime offers to silence shareholders.
The accompanying Rule amendments only serve to further reduce information to and from shareholders. The proposed change to Rule 14a-4 would grant companies discretionary authority to vote proxies on matters raised at a shareholder meeting but absent from or minimized on the proxy card. The Commission acknowledges that it anticipates shareholders may have difficulty in having their votes counted for proposals brought forward in other ways due to the new rules. A further amendment would compress the broker search period from 20 business days to five, shortening the window in which any investor can identify fellow owners and communicate with them
Fugere notes, “the Commission’s proposed changes to Rules 14a-8, 14a-4, and 14a-6 collectively demonstrate that it is not creating a level playing field for state laws to operate, instead it has tilted the field strongly in favor of shielding management from shareholder input. While the proposed Recission of 14a-8 might save companies from expending a vanishingly small percentage of their profits in responding to shareholder proposals, Rule 14a-4 imposes a significant financial burden on investors that otherwise seek to put valid proposals on a company’s proxy while creating a byzantine and difficult process which favors shareholder votes going to support management.”
Finally, Rule 14a-6 would eliminate the Notice of Exempt Solicitation entirely, eight months after the Commission barred most shareholders from filing one. The stated rationale is to ensure EDGAR does not become a platform communicating views not required to be publicly disseminated. The result is information asymmetry: a company’s proxy statement remains mandatory and publicly filed, while shareholder analysis of that statement has no official home. As You Sow launched Proxy Open Exchange in April to preserve public access to proxy memos after the January restrictions, and that platform is now, by default, the market’s primary repository.
“Taken together with the Commission’s abandonment of the no-action process last month and its proposed rollback of climate disclosure, the direction is unmistakable: public companies are being permitted to operate with the opacity of private ones while continuing to hold the public’s capital,” said Behar. “Investors did not ask for this. The largest asset managers did not ask for this. We would encourage every institution that votes proxies, every pension trustee, and every company that has ever used a shareholder proposal as an early signal of trouble to file comments. This is not a contest between advocates and corporations. It is a question of whether American markets keep the information flow that makes them worth investing in.”
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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.