Print
E-MailMark T. Uyeda is a Commissioner of the U.S. Securities and Exchange Commission. This post is based on his recent statement. The views expressed in this post are those of Commissioner Uyeda and do not necessarily reflect those of the Securities and Exchange Commission or its staff.
Today, the Commission proposes to rescind Rule 14a-8, which leaves determination about whether a shareholder proposal may be properly placed on a proxy statement to the states, companies, and shareholders. The Commission also proposes to amend Rule 14a-4 to expand the circumstances under which a company may exercise discretionary voting authority on certain proposals.[1] Lastly, the Commission proposes amendments that would modernize certain rules related to proxy solicitations.[2]
In framing today’s proposals, the federal securities laws authorize the Commission to regulate the dissemination of financial and business information by public companies, including disclosure for proxy solicitations in connection with shareholder meetings. Absent limited exceptions mandated by Congress,[3] the federal securities laws do not provide broad authority for the Commission to regulate the corporate governance and internal affairs of a corporation, which have long been the domain of the states.
Instead, the Commission’s primary mission is to ensure that investors are provided material information when making investment and voting decisions. Oversight of corporate governance is left to state law, which generally provides flexibility for corporations and their boards of directors to select specific provisions through their charters and bylaws. Indeed, the courts have also ruled against “back door” attempts by the Commission to regulate corporate governance indirectly through exchange listing standards.[4] Despite many opportunities to do so over the years, congressional efforts to federalize corporate law have never come to fruition.[5]
Thus, despite over eight decades of existence, to the extent that Rule 14a-8 created a federal right to place a proposal before a shareholder meeting, I find the legal authority for the Commission to mandate such act was lacking. Moreover, in more recent years, Rule 14a-8 has often served as a tool of special interests to advance political agendas unrelated to the business of a specific company.
As today’s proposing release notes, the number of shareholder proposals in recent years has continuously increased, while often garnering only minimal voting support. Rule 14a-8 was not intended “to burden the proxy solicitation process by requiring the inclusion” of proposals submitted by a few proponents that are “unrelated to the general interests of shareholders as shareholders.”[6]
Recent trends are troubling: Rule 14a-8 has been co-opted to advance the agendas of various political interests—acting without any fiduciary duty to a corporation or its shareholders—at the expense of the millions of investors that directly and indirectly own public companies. These political interests use Rule 14a-8 as leverage in order to achieve objectives that often are not materially relevant to a public company. Often, the mere threat of submitting a shareholder proposal under Rule 14a-8 is enough for a public company to negotiate certain concessions to the would be proponent in order to avoid a shareholder proposal.
One recent study conducted by the SEC notes that the number one reason for an investor to buy an investment is: “future growth of the investment [being] strong.”[7] Unfortunately, it is these investors who ultimately pay for the costs associated with these frequent niche topics submitted under Rule 14a-8 as shareholder proposals. Management and boards spend significant amounts of time and energy responding to shareholder proposals, which creates a tremendous opportunity cost that can be detrimental to the company as a whole.
Today’s proposal would return the question of what matters may be properly brought before a shareholder meeting to the states, companies, and boards of directors to determine whether a proposal should be included in the proxy statement. In a post-Rule 14a-8 landscape, where the existing substantive bases for exclusions are removed, one possible outcome is that the scope of permissible proposals could be significantly broadened if neither state law nor company bylaws place any restriction on matters that may be submitted for a shareholder vote. That, however, is a matter for others, not the Commission, to decide. Shareholders, or potential shareholders, have a lot of influence when it comes to corporate governance; if shareholders refrain from investing in companies with sub-optimal corporate governance arrangements, then those companies will suffer from having a higher cost of capital.
The Commission also is proposing to amend Rule 14a-4 to expand the circumstances under which a company may exercise, with respect to proxies it receives, discretionary voting authority on proposals that will be presented at a shareholder meeting but not included in the company’s proxy materials. In tandem with this proposed amendment, Rule 14a-4 as proposed would provide shareholders with the means to prevent the company from exercising such authority with respect to their individual shares. These changes would provide companies with increased flexibility, and shareholders with greater control, with respect to shareholder proposals for which a company may seek discretionary voting authority.
In addition to the proposed Rule 14a-8 rescission and the Rule 14a-4 amendments, the Commission also proposes changes aimed at modernizing our proxy solicitation rules to ensure that shareholders receive timely, accurate information through channels that reflect how investors communicate and access data today, rather than relying on frameworks built for a paper-based era. Eliminating duplicative or outdated requirements reduces unnecessary compliance costs for issuers and intermediaries. The Commission should be regularly revisiting its own rulebook to assess whether its regulatory framework keeps pace with evolving markets, technology, and investor needs rather than growing stale.
Today’s proposals represent a comprehensive effort at refocusing and modernizing our rulebook as it relates to shareholder voting, and I look forward to hearing the views of market participants.
I thank the staff of the Divisions of Corporation Finance, Investment Management, and Economic and Risk Analysis as well as the Offices of the General Counsel and the Chief Accountant for their work on these proposals.
1 Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4, Release No. 34-106383, available at https://www.sec.gov/rules/proposed/2026/34-106383.pdf.(go back)
2 Proxy Solicitation Modernization, Release No. 33-11439, available at https://www.sec.gov/files/rules/proposed/2026/33-11439.pdf.(go back)
3See, e.g., Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010).(go back)
4See, e.g., Business Roundtable v. SEC, 905 F.2d 406 (D.C. Cir. 1990).(go back)
5Supra n. 1 at 52, see also Louis Loss, Joel Seligman, and Troy Paredes, Securities Regulation 1.C (6th Edition 2018).(go back)
6See Proposed Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by Security Holders, Release No. 34-19135 (Oct. 14, 1982) [47 FR 47420, note 8 (Oct. 26, 1982)].(go back)
7See generally U.S. Sec. & Exch. Comm’n, Off. of the Inv. Advoc., Perspectives on Investing in the U.S.: Insights from THRIVE July 2024 at 8, (April 2025).(go back)
