The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Wed, 22 Apr 2026 11:32:28 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png The SEC, Delaware and the High Stakes for Investors on Advisory Shareholder Proposals – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 The SEC, Delaware and the High Stakes for Investors on Advisory Shareholder Proposals https://corpgov.law.harvard.edu/2025/11/20/the-sec-delaware-and-the-high-stakes-for-investors-on-advisory-shareholder-proposals/?utm_source=rss&utm_medium=rss&utm_campaign=the-sec-delaware-and-the-high-stakes-for-investors-on-advisory-shareholder-proposals https://corpgov.law.harvard.edu/2025/11/20/the-sec-delaware-and-the-high-stakes-for-investors-on-advisory-shareholder-proposals/#respond Thu, 20 Nov 2025 12:32:37 +0000 https://corpgov.law.harvard.edu/?p=177785?d=20251119155525EST Posted by Sanford Lewis and Khadija Foda, Shareholder Rights Group, on Thursday, November 20, 2025
Editor's Note:

Sanford Lewis is Director and General Counsel, and Khadija Foda is an Associate Counsel at the Shareholder Rights Group. This post is based on their Shareholder Rights Group memorandum, and is part of the Delaware law series; links to other posts in the series are available here.

SEC Chairman Paul Atkins dropped a bombshell in a keynote speech on October 9, 2025, at the Delaware-based Weinberg Center for Corporate Governance. He endorsed a novel and disruptive legal theory which could eliminate about 98% of shareholder proposals, radically altering the landscape of corporate governance in US public markets. The theory supported by Atkins posits that advisory (i.e., non-binding) shareholder proposals do not constitute “proper business” for an annual meeting under Delaware law. The vast majority of shareholder proposals submitted to US corporations are written as advisory proposals, meaning that the board retains discretion over whether and how to act on them. The policy suggested by Atkins, taken to its conclusion, could eliminate all such advisory proposals. On November 17, 2025, the Division of Corporation Finance, in furtherance of the Chairman’s position, announced that it would not issue shareholder proposal no action decisions on the merits for the 2026 proxy season other than those that seek to advance a “proper business” theory for exclusion.⁠

The effective adoption of this new untested legal theory and suspension of the no action process creates extraordinary uncertainty for proponents and companies. In the absence of informal no action rulings, after receiving a notice of intent to exclude shareholders’ only legal recourse is to sue a company to force it to include the proposal in the proxy. The uncertainty for companies is compounded by the governance implications and potential repercussions of excluding proposals unilaterally in the absence of a substantive determination by the SEC, which may boost votes against directors and sour  relations with investors.

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