SEC’s stance on shareholder proposals draws mixed reactions – Intelligize

Last November, the Securities and Exchange Commission essentially told companies that they would be on their own when it comes to decisions about excluding shareholder proposals from their proxy statements. In practice, the new approach has received mixed reactions at best.

As a refresher, the SEC’s Division of Corporation Finance, known as CorpFin, announced on November 17, 2025 that it planned to stop providing substantive responses to most requests for consent to shareholder proposals under Rule 14a-8 during proxy season. Companies have long relied on informal guidance from the agency in the form of so-called “no-action letters” when deciding to exclude the proposals from proxy votes. However, the new policy means that companies must determine for themselves whether they have a “reasonable basis” to exclude shareholder proposals. (It contains some limited exceptions for constitutional law issues.)

The consensus among corporate management professionals was that the SEC’s policy change would mainly impact ESG proposals – which address environmental, social and governance issues – and counter-proposals from shareholders seeking to neutralize the impact of ESG on company policies. Organizations such as the Interfaith Center for Corporate Social Responsibility and the Shareholder rights group have taken a strong exception to the SEC’s new policy.

It could be argued that the SEC’s new stance on no-action requests to exclude shareholder proposals could ultimately lead to proxy ballot proposals that would not have survived the prior exclusion process. For example, The Walt Disney Company had previously filed no-action requests against three shareholder proposals it is including in this year’s proxy statement. Similarly, an anti-ESG proposal found its way into the proxy statement of Costcoeven though the retail chain filed a no-action motion on the measure in September.

Such developments indicate that without the certainty provided by no-action letters, the SEC’s policies may have made life more difficult for corporate boards. There is growing concern that disputes between major investors and companies over the exclusion of proposals will end up in court. In a letter to SEC Chairman Paul Atkinsthe Council of Institutional Investors noted that companies excluding shareholder proposals under the new process “could result in special scrutiny of those boards.” That would include no-vote campaigns and lawsuits.

“Thus, rather than easing pressure on corporate boards, the Declaration could result in greater instability at the board level by unnecessarily increasing the reputational or legal risks of issuers,” the CII said.

The SEC itself recently received a favorable statement in a legal challenge from investors regarding the agency’s ability to amend Rule 14a-8. That won’t do anything to allay the new fear of lawsuits in corporate America, but it could prompt the agency to more strongly commit to its policy on shareholder proposals. The real question to watch as this proxy season continues: Will companies become frustrated by the uncertainty caused by the SEC’s pushback on no-action letters, or will they embrace greater autonomy to overturn the measures as they see fit?

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