From the Freshfields SEC Desk: 14a-8 Bypass: SEC Chairman Offers Companies Way to Short Circuit Shareholder Proposals

In an October 9, 2025 speech, SEC Chairman Paul Atkins sent a clear signal that SEC Staff would grant broad No-Action Letter relief to Delaware companies looking to exclude shareholder proposals pursuant to Exchange Act Rule 14a-8.  

Are Shareholder Proposals Dead? 

Even though Chairman Atkins’s speech focuses on environmental and social shareholder proposals, the impact extends beyond those two topics and implies that broad relief may be granted for any shareholder proposal brought under Rule 14a-8. Chairman Atkins focused on the precatory, or non-binding, nature of shareholder proposals, noting that he believes Delaware law does not permit precatory proposals.    

Under this theory, precatory proposals are not proper subjects for shareholder action, which would permit management to request and receive no-action relief under 14a-8(i). But the rub is that shareholder proposals governed by Rule 14a-8 are almost always non-binding, including governance and compensation-related shareholder proposals as well as environmental and social proposals. 

How Significant is the Issue of Shareholder Proposals? 

Receiving shareholder proposals is a significant amount of work for a company. It often triggers multiple levels of internal reviews, engaging external counsel, negotiations with proponents in an attempt to facilitate withdrawal, and a submission of a well-researched and crafted no-action letter request to the SEC.  Failure to negotiate a withdrawal of a proposal or to receive no-action relief results in inclusion of the proposal in the company’s proxy statement with a response from management, as well as the solicitation and tabulation that occurs with every item to be voted on in the proxy.  It may also result in shareholder engagement before and after the vote.  If the proposal is supported by a majority of votes cast, there is an expectation by shareholders and proxy advisory firms that boards address the proposal or risk withhold votes or votes against directors the following year.  Even proposals that receive significant, but not majority, support often merit the same engagement workstreams.  The board, or a committee of the board, is often involved in post-engagement briefing and potentially earlier parts of the workstream. Every shareholder proposal involves a significant amount of work for a company. 

Not every company receives significant numbers of shareholder proposals. S&P 500 companies received an average of 2.2 known proposals in 2025,https://www.freshfields.com/globalassets/noindex/documents/trends-and-updates-from-the-2025-proxy-season-june-2025.pdf).

[2] Id.

[3] Id.