The Securities and Exchange Commission (SEC) submitted a proposed rule for interagency review on Aug. 28 that would rescind Rule 14a-8, the federal regulation requiring public companies to include qualifying shareholder proposals in their annual proxy statements. The proposal would also amend Rule 14a-4, which governs proxy solicitation materials.

Under the current rule, shareholders who meet minimum ownership thresholds can require companies to put proposals—on topics such as executive pay or climate policy—to a vote at annual meetings. Rescinding the rule would eliminate that federal requirement and shift jurisdiction over shareholder proposal disputes to the states where companies are legally incorporated.

A representative of SEC Chairman Paul Atkins said that Atkins "has highlighted concerns that the SEC's Rule 14a-8 on shareholder proposals exceeds the Commission’s authority and ⁠infringes upon state laws. To that end, the Commission is expected to consider a ​proposal to rescind the rule and return the role of regulating shareholder proposals to ​the states."

The proposed rule is listed as economically significant and is expected to be published for public comment in October 2026, according to the federal regulatory agenda.

Moving jurisdiction over shareholder proposals to the states could create different rules for investors depending on where a company is incorporated. State requirements are not uniform, including how many shares investors must own to bring a matter to a vote. Under a new Texas law, for example, investors could need as much as $1 million in shares to file a resolution, compared with $2,000 under the current SEC rule.

The Interfaith Center on Corporate Responsibility, an investor coalition focused on corporate social responsibility that opposes the SEC's proposal, criticized the potential shift. The group's senior policy adviser, Tim Smith, said, "Across the investor community there will be a response to the questionable legal arguments he (Atkins) is making about the authority of the SEC."

Rule 14a-8 has been the primary federal mechanism through which investors have filed proposals on climate, diversity, and executive compensation matters, making it central to both the shareholder-activism and anti-ESG movements in corporate governance. Support for ESG-related shareholder proposals has declined in recent years even as the rule has remained a flashpoint.

The SEC's Division of Corporation Finance announced on Aug. 14, 2026, that it would permanently stop issuing no-action letters under Rule 14a-8—nonbinding staff responses on whether a company could exclude a shareholder proposal from its proxy materials. The move made permanent a pause first announced in November 2025 for the 2025-26 proxy season only, and went further by ending review of a narrow exclusion category the SEC had continued handling during that pause. The division said the change would let it focus resources on statutorily required filing reviews.

Atkins said in July 2026 that fears of mass proposal exclusions or a litigation spike had not materialized; a Freshfields count found 66% of known proposals were placed on proxies as of June 15, 2026, up from 59% a year earlier. The Interfaith Center on Corporate Responsibility opposed the change; senior policy advisor Tim Smith said investors would now be "forced to consider other options" when companies exclude proposals unilaterally.

The Interfaith Center and As You Sow sued the SEC in March 2026 over the original pause, arguing it bypassed Administrative Procedure Act rulemaking requirements. That case remains pending.

Ballotpedia tracks support for and opposition to the environmental, social, and corporate governance (ESG) investing movement. To learn more about arguments for, against, and about ESG, click here. For more information on reform proposals related to ESG policy, click here.