Reclaiming the Proxy: How the SEC Is Handing More Control Back to Issuers

For decades, the annual meeting ran through the same cast of middlemen. Under Rule 14a-8, ¹ companies generally had to put shareholder proposals in their proxy statements for a vote, unless a proposal fit into one of the Rule’s built-in exceptions. The SEC staff served as an informal referee, weighing in on which proposals a company could leave out. Proxy advisers steered institutional votes at scale, with ISS’ and Glass Lewis’ together controlling the vast majority of the proxy advisor market. And for retail holders—who frequently faced real hurdles to voting—it was often easier not to show up at all.

A handful of recent securities law developments share a common thread: the federal proxy system is moving away from these middlemen. Most notably, the SEC has stopped refereeing shareholder proposal exclusions and has proposed scrapping Rule 14a-8 altogether. The staff has also blessed voluntary retail voting programs making it less risky, from a Schedule 13G perspective, for companies to reach out to their investors for feedback. Meanwhile, the Department of Justice and Department of Labor have taken aim at the outsized influence of the proxy advisory firms.

The upshot: issuers are dealing with their shareholders more directly and with more freedom—but with more responsibility—especially during proxy season. As a result, shareholder proposals, institutional engagement, and retail participation are becoming questions of company strategy, not just compliance.

Who Decides Whether a Shareholder Proposal Belongs in the Proxy?

For years, the SEC staff acted like a judge for shareholder proposals. Companies asked for permission to exclude a proposal from their proxies, and the staff answered with no-action letters that weren’t legally binding but carried real weight. That changed in November 2025, when the SEC’s Division of Corporation Finance announced it would not respond substantively to most Rule 14a-8 no-action requests during the 2025-26 proxy season. With limited exceptions, the staff simply issued a “no objection” letter to any company that represented, without qualification, that it had a reasonable basis to exclude a proposal. Then, on August 14, 2026, the Division announced it would stop responding to these no-action requests altogether, leaving listed issuers to determine how best to proceed for themselves.

The challenge that these companies face is that Rule 14a-8’s procedural requirements for inclusion—and exclusion—of shareholder proposals from a proxy still apply. Companies are still legally required to include proposals that satisfy the criteria established by the rule or file a notice explaining why they plan to exclude a proposal at least 80 calendar days before filing their definitive proxy statement. That notice now goes through the SEC’s online Shareholder Proposal Form.

But a staff response to such a notice was never legally required, and now, it simply won’t come, leaving an issuer without comfort that its determination to exclude a shareholder proposal is compliant with the rules. With the SEC out of the no-action business, companies must now make the first call on exclusion themselves—subject mainly to the threat of litigation, should negotiation fail. This is because without the ability to rely on the staff to weigh in on an exclusion decision, a proponent’s main way to push back on the exclusion of a proposal is to sue the company to force it onto the ballot.

Early results from the 2026 proxy season suggest that litigation is a real, if uneven, check. Six proponents sued companies that had excluded their proposals: three ² suits were withdrawn after the company agreed to include or implement the proposal, courts sided with the company in two ³ cases, and the proponent won one. ⁴ In other words, disputes have simply moved to the negotiating table, with the threat of a lawsuit hovering overhead.

Then, on September 16, 2026, the SEC went even further, proposing to scrap Rule 14a-8 entirely and leave shareholder proposals to state law and companies’ governing documents. We covered the details of that proposal in one of our prior insights but, notably, shareholders are already going straight to companies in light of this proposal: investors have pressed companies to oppose the SEC’s rescission proposal and keep accepting proposals, and some companies have already agreed to do so regardless of what the SEC decides. In addition, some companies have recently received shareholder proposals to preserve shareholder proposal access rights in a manner consistent with the current requirements of Rule 14a-8.

How Could the Proposed Rescission of Rule 14a-8 Affect Proxy Season?

The big picture remains: the SEC is clearly stepping back from refereeing issuer-shareholder fights over the company’s proxy statement, which leaves the issuers and shareholders to figure out how to fill the gap.

• First, Rule 14a-8 stays on the books while the rulemaking is pending, and with submission deadlines for many calendar-year companies falling in November and December 2026, rescission is unlikely to affect the 2027 proxy season. And because many companies already have 14a-8-style provisions in their bylaws, many will need bylaw amendments to remove their shareholders’ rights to include proposals in their proxy statements even after rescission.
• Second, Commissioner Mark Uyeda has warned that proposal volume could actually rise if the rule’s exclusion bases disappear and neither state law nor governing documents limit the proposals shareholders can submit.
• Third, investors may push (and in some cases, as noted above, have already started pushing) companies to adopt 14a-8-style bylaw rights or similar protections (or confirm they won’t remove existing ones) to ensure that, regardless of the SEC’s position, the rights they got accustomed to do not disappear.
  
  
  
  • Texas already lets nationally listed corporations opt in to ownership and solicitation thresholds for proponents; Delaware has not addressed these issues in detail.
  • Other states may (or may not) follow suit, and a state law that reaches companies merely headquartered there, as Texas’s does, could create choice-of-law conflicts.
  • Owning the process may not end the fights; it may just move them to state law, company bylaws, and the courtroom (with state vs federal court jurisdiction becoming a further interesting question).

Equally importantly, companies should not assume rescission means less activism. Proponents may shift to binding bylaw amendments, “vote no” campaigns, or litigation aimed at building favorable state-law precedent, and the cost of fighting exclusions without clear procedural rules could push companies toward accommodating demands in settlement negotiations. However, one can remain fairly confident that activists will not go away and will simply tailor their approach to the available tools.

How Can Companies Build More Direct Relationships With Shareholders? Three Recent Developments

Three recent developments could make a real difference in how companies talk to shareholders and collect voting instructions:

1. Investor-directed voluntary retail voting programs, or IVRVPs, are creating new, issuer-driven tools for engaging retail holders, including pre-meeting enrollment, standing voting instructions, and potentially cross-issuer voting “Hubs.”
   
   
2. Under new SEC guidance, when an issuer invites a Schedule 13G holder to talk about the holder’s views on past or upcoming votes, that conversation is less likely to count as an attempt to “influence control” that would put 13G eligibility at risk."
   
   
3. The DOJ’s withdrawal of its antitrust guidance for Institutional Shareholder Services (ISS) and the Department of Labor’s suggestion that proxy advisers may be ERISA fiduciaries point toward more direct issuer-shareholder engagement.
   
   

Engaging with Retail Shareholders via IVRVPs

While much of the discussion around how issuers react to the changing proxy rules remains to be written, the most concrete change we have recently seen is in retail voting. IVRVPs let retail holders give a standing instruction to an issuer to vote their shares along with the board’s recommendations (i.e., a pre-proxy proxy, in effect, supporting the board’s position). The model began with the staff’s September 2025 no-action letter to ExxonMobil, which granted relief for a free voting program set up by ExxonMobil. Participants in that program received annual reminders, could cancel or override their instructions at any time, and still received all proxy materials at the same time as other shareholders, even though their votes (assuming they did not change them) were effectively registered with the company in advance of even knowing what the proposals were.

Three letters issued in late September 2026—Goldman Sachs, Mutual Fund Directors Forum, and Tesla—turned that precedent into a broader framework. Together, they let issuers solicit, and investors make, enrollments in retail voting programs before a meeting-specific definitive proxy statement is furnished to shareholders, as long as the definitive proxy statement accompanies or precedes any proxy card, once distributed. Issuers can offer enrollment to all retail shareholders or a subset and to registered investment advisers voting for clients. Shareholders can choose a standing voting instruction covering all matters, or all matters except contested elections and shareholder-approved M&A deals. Tesla also contemplates shared enrollment “Hubs” that span issuers and, most notably, allow any issuer running a consistent IVRVP to rely on the relevant no-action letter without seeking its own relief. One catch: the staff did not grant relief under the Investment Company Act or the Advisers Act, and matters requiring an Investment Company Act majority still need that vote.⁵

These programs fundamentally change how the annual meeting works. Instead of chasing votes meeting-by-meeting (and, as a result, facing the risk of having to adjourn a meeting to get a vote passed), companies can run enrollment year-round, with instructions carrying over to the next meeting for which proxy materials haven’t yet been filed. Tesla’s hub-and-spoke model points toward a shared, market-wide infrastructure for retail participation. Investor protections remain at the heart of the deal: participants always get proxy materials, can override or opt out for free, and receive at least annual reminders. Companies adopting these programs should expect questions about who’s enrolling, how the program is disclosed, and how much of the vote it represents, but the programs provide a valuable new tool for engaging retail shareholder participation.

Talking to 13G Investors Just Got a Little Easier

The second change concerns whether institutional holders can talk to issuers without risking their Schedule 13G status. In February 2025, the SEC staff warned that an investor pressuring management toward specific actions (for example, by tying votes to governance changes) could count as an attempt to “influence control” and make a holder ineligible to file their ownership disclosures on Schedule 13G (versus Schedule 13D, which has more extensive disclosure obligations and requires prompt updates to be filed in the event of certain changes). Not surprisingly, many investors got cagey and became hesitant to engage in any discussions with issuers at all, out of fear that ordinary course communication could give rise to additional disclosure and compliance obligations.

On September 2, 2026, the staff issued new interpretations: when the issuer starts the conversation, or asks a holder to explain a past vote, the engagement is less likely to be seen as an attempt to influence control. So a 13G filer can discuss past or upcoming meeting matters at the issuer’s invitation without losing 13G eligibility for that reason alone. Similar protections extend to conversations with proxy solicitors and requests to clarify issuer disclosures.

By protecting issuer-initiated engagement, the staff has made it easier for companies to reach their holders directly. That matters in contested situations, too: commentators have observed that the February 2025 guidance left some companies with less information about their prospects in a proxy fight, potentially leading to settlements that gave activists more than most shareholders wanted. But the protection isn’t absolute. The analysis still turns on all of the facts, including what’s actually said in the meeting, and the new interpretations clarify, rather than replace, the earlier guidance. A holder that ties its vote to a requested change in management or business strategy still risks losing 13G eligibility, and some investors that moved to “listen-only” engagement may be slow to change course.

Why ISS and Glass Lewis Are Facing More Pressure

The third change comes from outside the SEC, but it fits the same story. On August 5, 2026, the DOJ’s Antitrust Division withdrew a nearly 40-year-old business review letter it had issued to ISS (concluding that, at the time, DOJ had no intention of bringing any antitrust action against the establishment or operation of ISS), pointing to ISS and Glass Lewis’s combined market share of more than 90 percent and noting that ISS had expanded into corporate consulting—a development the original letter did not contemplate. The DOJ was still careful to say that proxy advising isn’t inherently an antitrust violation, but effectively indicated it no longer had a ‘free pass’ from being assessed in the context of competition concerns.

Separately, in April 2026, the Department of Labor explained that proxy advisers may be ERISA fiduciaries if they exercise control over shareholder rights or provide investment advice for a fee to ERISA plans about how to vote. Neither action regulates issuer engagement directly, but both make it legally and reputationally costlier to lean on the proxy advisors who have long been dominant voting intermediaries. If proxy advisers face potential antitrust exposure or fiduciary duties under ERISA, investors may rethink how much weight to give to ISS or Glass Lewis recommendations. Those recommendations are already not outcome-determinative: in two proxy contests this season, management swept the election, even though both advisers backed a majority of the dissident slate. And if that reliance fades, the company’s own pitch to its shareholders matters that much more. It’s another step toward direct engagement, with fewer middlemen in the way.

Great Power, Great Responsibility

All of these developments point the same way: the SEC is stepping back from its traditional role as the go-between for issuers and shareholders and nudging other players to do the same. Add it all up, and issuers have more control over the annual meeting than at any point in recent memory. But, to borrow a phrase familiar to generations of comic book readers: with great power comes great responsibility.

And that responsibility is real. Without no-action relief, exclusion decisions carry litigation risk, so companies need solid reasoning and a negotiation plan before any dispute reaches court. If Rule 14a-8 is rescinded, advance notice bylaws and state law will decide who gets on the ballot, so companies should take a fresh look at their governing documents and the rights available under their state of incorporation. Advance notice provisions adopted on a clear day, well before any dispute, are more likely to hold up if challenged. Retail voting programs need careful design, clear disclosure, public filings, and reminder systems, and any program that strays materially from the no-action letters may need its own relief. Institutional engagement still calls for discipline about who reaches out and what gets said.

Bottom line: the annual meeting is becoming a strategic program that the company must design, run, and defend on its own. Plenty remains unsettled—the existing rules remain in force while the rescission proposal is pending, prior no-action letters were only staff positions, a future administration could reverse course, and investors may respond with private ordering, litigation, or more aggressive solicitations. Companies that treat this shift as an opportunity to build their own playbook for proposals, engagement, and retail participation will be best positioned to strengthen their shareholder relationships and turn regulatory change into a strategic advantage.