The U.S. Securities and Exchange Commission (SEC) has signaled it will propose rules this year to amend its procedures governing shareholder proposals, a move that has drawn opposition from a coalition of investor advocates. After an unusual proxy season, the coalition is asking that any changes "largely preserve the rule."

Shortly after SEC Chairman Paul Atkins delivered a speech suggesting a more comprehensive overhaul of Rule 14a-8, which governs shareholder proposal procedures, a group of investor advocates submitted a regulatory petition to the agency, urging that any changes be narrower in scope and not include a complete elimination of the rule. This information comes from a press release and a petition shared with ESG Dive.

The SEC decided in November not to participate in most no-action proceedings during the 2025-26 proxy season, citing a month-long government shutdown. Earlier this month at a corporate governance conference, Atkins said that "the staff's absence this quarter did not create the chaos many feared," and that, beyond the agency's role in the process, "the SEC is also evaluating the rule itself in its entirety."

In a petition filed with the SEC on July 23, investor advocates asked the agency to immediately restore the no-action process and to consider implementing a mandatory two-week engagement period after a company issues an exclusion notice, along with other adjustments to the exclusion process. The coalition includes investor organizations Ceres, the US Sustainable Investment Forum, the Interfaith Center on Corporate Responsibility, the Shareholder Rights Group, and For the Long Term, as well as New York State Comptroller Thomas DiNapoli.

"The right to submit a shareholder proposal and have it appear in a company's proxy statement is not a courtesy granted by management. It is a fundamental aspect of corporate ownership," the petition states. "This voice is also a source of market efficiency. ... Restricting this voice would weaken one of the few mechanisms through which dispersed owners can hold management accountable."

In addition to suggesting changes that could simplify the exclusion of shareholder proposals before they reach the SEC, the petition also requests that, if the agency is considering broader changes to the process, it should "simultaneously evaluate alternatives to eliminating the no-action process while retaining the federal rule."

"A complete repeal of Rule 14a-8 would break the long-standing balance between investors and their companies," the petition states.

In the latest federal regulatory agenda, the SEC stated it plans to propose "amendments to modernize certain rules relating to proxy solicitation procedures, including certain filing and procedural requirements related to proxy solicitations and shareholder meetings, to reduce costs and alleviate compliance burdens," with amendments planned to be proposed by October.

Atkins, in a speech on July 9 at a corporate governance association meeting, noted that six lawsuits arose due to the lack of staff review, but said that "they represent only a small fraction of the total number of excluded proposals." Atkins said his "biggest takeaway is that staff intervention between companies and shareholder proponents is not necessary for effectively and efficiently resolving whether shareholder proposals should be included in proxy statements."

However, the proportion of challenged shareholder proposals that did not make it onto proxy statements jumped from 50% in 2025 to 82% in 2026, said Beth-ann Roth, general counsel of the Interfaith Center on Corporate Responsibility, during a Thursday morning conference call.

In addition to submitting the regulatory petition, the Shareholder Rights Group and the nonprofit legal organization Democracy Forward also filed a Freedom of Information Act request "seeking communications and calendar entries related to previewing the Commission's 14a-8 rulemaking plans to outside entities," said Sanford Lewis, director of the Shareholder Rights Group, on Thursday. Lewis said the coalition also submitted an additional petition to the agency, accompanied by more than 32,000 signatures from investment firms, investors, and beneficiaries, also urging the SEC to preserve Rule 14a-8.

"This rule has been called the cornerstone of U.S. corporate governance and engagement," Lewis said on Thursday's call. "If the SEC is considering drastic measures that would effectively remove this cornerstone, then under the Administrative Procedure Act, they must also consider alternatives that are less harmful to the market."