Public companies could gain greater control over shareholder proposals, and Texas could become a more attractive state for incorporation, if a new Securities and Exchange Commission (the “SEC”) proposal is adopted. On September 16, 2026, the SEC proposed rescinding Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), which governs when companies must include shareholder proposals in their proxy materials, and would ultimately shift those determinations to state law and company governing documents. The proposal also includes amendments to Rule 14a-4(c) and, in a separate proposing release, seeks to modernize several proxy solicitation requirements.

Proposed Rescission of Rule 14a-8

Rule 14a-8 currently provides the federal framework governing when companies must include shareholder proposals in their proxy materials (i.e., the proxy statement and proxy card distributed to shareholders in connection with a shareholder meeting). The rule permits qualifying shareholders to seek inclusion of eligible proposals, subject to detailed ownership, procedural, and substantive requirements. The SEC proposed rescinding Rule 14a-8 in its entirety, stating its view that the rule exceeds the scope of its authority under Section 14(a) of the Exchange Act and intrudes into matters traditionally governed by state corporate law. If adopted, the proposal would leave determinations regarding the role of shareholder proposals to state law and the provisions of company governing documents, if permitted by state law. Shareholders could continue to present proposals where permitted under these frameworks, but the federal rule would no longer provide a mechanism requiring companies to include qualifying proposals in company proxy materials.

Texas Offers a Strategic Advantage

Section 21.373 of the Texas Business Organizations Code, enacted in 2025, allows Texas incorporated companies to adopt bylaw provisions that restrict shareholder proposals to shareholders who have held at least the lesser of $1 million in market value or 3% of the company’s voting shares for a minimum of six months and who solicit the support of holders representing at least 67% of the voting power entitled to vote on the proposal. As a recently enacted provision, Section 21.373 has not yet seen widespread adoption, but it could become significantly more meaningful if the SEC’s proposals are finalized and federal shareholder proposal requirements are rescinded, giving Texas incorporated companies a clear, established framework while other jurisdictions are still developing their approaches. In addition to Texas, Delaware and other states are also expected to adopt further amendments to their statutes relevant to shareholder proposals to clarify company and stockholder rights as the regulatory landscape evolves.

Proposed Amendments to Rule 14a-4(c)

Rule 14a-4(c) currently governs when a company may exercise discretionary voting authority, which allows a company to vote proxies on matters not covered by the proxy card or for which no voting instructions were given. The proposed amendments would broaden a company’s ability to use this discretionary authority when voting on shareholder proposals that are presented at a meeting but were not included in the company’s proxy materials. This change is particularly relevant if Rule 14a-8 is rescinded, as shareholders may more frequently present proposals through their own solicitations rather than through company proxy materials, meaning such proposals would fall within the scope of the company’s discretionary voting authority. Simultaneously, the amendments would allow individual shareholders to elect not to confer such discretionary authority with respect to their shares, thereby providing shareholders with greater control over whether the company may vote those shares on matters not included on the company’s proxy card.

Proxy Solicitation Modernization

In a separate proposing release, the SEC proposed amendments intended to update the proxy rules to reflect current market practices, technology, and methods of shareholder communication and to simplify compliance. The proposal would: 

• Eliminate the requirement to deliver a separate annual report to security holders under Rule 14a-3, provided the company has filed or furnished the applicable annual report information through EDGAR as contemplated by the proposed amendments; 

• Eliminate the 20 business day advance delivery requirement under Schedule 14A and Forms S-4 and F-4 for proxy statements or prospectuses that incorporate information by reference; 

• Eliminate the requirement and ability to submit Notices of Exempt Solicitation, which are filings currently required under Rule 14a-6(g) by parties who beneficially own more than $5 million in securities and conduct solicitations exempt from the proxy rules under Rule 14a-2(b);

• Reduce the deadline for initiating a broker search from 20 business days before the record date to five business days before the record date; and 

• Revise the cover pages of Schedule 14A and Schedule 14C to require contact information for a representative who can respond to questions regarding the filing. 

Potential Implications for Public Companies

If adopted, the proposals could significantly affect the shareholder proposal and proxy solicitation landscape for U.S. public companies.

Company governing documents may assume greater importance: Charters, bylaws, and advance notice provisions will play a larger role in determining whether and how shareholders can present proposals for consideration at shareholder meetings. Companies should evaluate whether their governing documents address shareholder proposals and related meeting procedures with sufficient clarity, align with applicable state law requirements, and reflect the company’s preferred approach to shareholder engagement. In particular, companies should consider how to address floor proposals at shareholder meetings (if permitted) and whether advance notice bylaws originally drafted contemplating Rule 14a-8 timelines should be updated if the SEC proposal is adopted.

Companies may have more flexibility in proxy voting: The Rule 14a-4(c) amendments would expand when companies can exercise discretionary voting authority over shareholder proposals not included in company proxy materials. This could give companies greater control over how votes are cast on proposals presented outside of the company’s proxy process. Companies may wish to evaluate their proxy and voting procedures, as well as related proxy disclosures, to determine how best to exercise this expanded authority if the amendments are adopted.

Requirements may vary by jurisdiction: The proposed framework would look to state law, which means shareholder proposal rights and procedures are likely to differ among jurisdictions. Companies should familiarize themselves with the specific requirements under the laws of their state of incorporation to ensure their governing documents align with applicable legal standards and monitor ongoing state law developments. Companies may also consider whether there are advantages to be gained by incorporating or reincorporating into a jurisdiction that has more developed requirements and better meets their governance needs.

What Companies Should Do Now

The SEC’s actions are proposed amendments only, and the existing federal proxy rules remain in effect unless and until the SEC adopts final rules rescinding or amending them. Companies should not expect immediate changes to shareholder proposal procedures for the upcoming proxy season and instead should continue to prepare for the 2027 proxy season under the current Rule 14a-8 framework and comply with existing shareholder proposal and proxy requirements. However, companies should also be aware that the proposals may influence shareholder and company behavior before any final rules are adopted; shareholder proponents may seek to use the existing Rule 14a-8 process more actively while it remains available. As we await final rules:

• Continue planning for the 2027 proxy season under existing Rule 14a-8 requirements and shareholder proposal deadlines; 

• Monitor the rulemaking process and the comments submitted by issuers, investors, trade associations, and governance organizations; 

• Evaluate whether existing charter and bylaw provisions adequately address shareholder proposal procedures if the federal inclusion framework is rescinded; 

• Evaluate proxy and voting procedures in light of the proposed Rule 14a-4(c) amendments;

• Consider whether Texas incorporation or reincorporation may offer strategic advantages, particularly given the shareholder proposal framework established under Section 21.373 of the Texas Business Organizations Code and the state’s ongoing efforts to adopt company friendly amendments designed to enhance its competitiveness as a corporate domicile; and

• Consider participating in the SEC comment process if the proposals would materially affect the company or its shareholders. 

For More Information

The SEC’s proposing releases, fact sheet, press release, and Chairman Atkins’ statement are available here: 

• SEC press release announcing both proposals

• Rule 14a-8 and Rule 14a-4(c) fact sheet

• Rule 14a-8 rescission and Rule 14a-4(c) proposing release (Release No. 34-106383)

• Proxy Solicitation Modernization proposing release (Release Nos. 33-11439 and 34-106385)

• Chairman Atkins’ September 16, 2026 statement

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