By Announcement today, the Division of Corporation Finance has apparently determined that, as a matter of “resource and timing considerations,” it will not respond to no-action requests for relief under Rule 14a-8. But, this Announcement is more of a giveaway to issuers than an exercise in resource allocation. And, more directly, it is an act of hostility toward shareholders.
For example, although the Announcement headlines that staff will not issue no-action relief to companies seeking to exclude shareholder proposals this proxy season—staff is purportedly being neutral and staying out of the mix—the Announcement later allows that, if a company really wants the SEC’s blessing and asks nicely (think, “pretty pretty please”), then all the company needs to do is cite to a rule provision and the Division will issue “no objection” relief. The Division will take the company’s request at face value—(“the Division will not evaluate the adequacy of the representation or express a view on the basis or bases the company intends to rely on in excluding the proposal”). And, notwithstanding that the Division will not do any substantive review of the company’s representations or interpretations, “the Division will respond with a letter indicating that, based solely on the company’s or counsel’s representation, the Division will not object if the company omits the proposal from its proxy materials.”
It is one thing to announce that the Division is not in the business of issuing no-action letters due to resource constraints. It is another thing entirely to pronounce—tell us what you want us to say and we’ll bless it. Indeed, the Division will “not object” even if it would have disagreed with the company’s analysis had it substantively reviewed the submission. And, the Division will apparently “not object” even if the representations are unreasonable on their face or contain misrepresentations or omissions. Why should the Division “not object” when a submission is clearly objectionable? Today’s missive will give the false impression that the Division is “not objecting” to a company’s position because it agrees with the grounds of the submission; when in fact the Division is “not objecting” because staff have been ordered to rubber stamp those submissions irrespective of their content.
Further, the Announcement carves out one exception to the “no-action” entitlement to companies—for so called “precatory” or non-binding proposals. The reason for this exception is “recent developments regarding the application of state law and Rule 14a-8(i)(1)” for which there is “not a sufficient body of applicable guidance.” But the Announcement does not cite any changes in law. (Spoiler alert – that is because there have not been any). What has changed is institutional policy. The Chairman has indicated in a recent speech that if a company obtains an opinion of counsel that precatory proposals are not a proper subject for shareholder action under Delaware state law, then he has “high confidence that the SEC staff will honor that position.”[1] The Chairman’s speech is a not-so-implicit invitation for any lawyer (knowledgeable or not) to write an opinion favorable to their client, and then the Division will give its seal of approval to jettison a sweeping slate of shareholder proposals. The speech leaves the uncanny impression that the Commission is now anointing itself the newest Vice Chancellor on the Delaware Court of Chancery, effectively creating new state law (which it can then itself bless), to carry out an agenda that affords companies sweeping rights to reject shareholder proposals without impediment or regard for precedent.
Finally, the Announcement states that no-action relief has become superfluous because there is an “extensive body of guidance from the Commission and the staff available to both companies and proponents.” But later, it notes that “[p]rior staff responses to Rule 14a-8 no-action requests are not binding and reflect only informal staff views.” The message of course is that when the Division does speak, in carrying out this Commission’s pedagogy, it is allowed to cherry-pick and determine which guidance it finds most helpful to the current agenda (and companies are apparently invited to do the same).
Today’s Announcement is a Trojan horse. It cloaks itself in neutrality by expressing that the Division will not weigh in on any company’s exclusion of shareholder proposals, but then it hands companies a hall pass to do whatever they want. It effectively creates unqualified permission for companies to silence investor voices (with “no objection” from the Commission). This is the latest in a parade of actions by this Commission that will ring the death knell for corporate governance and shareholder democracy, deny voice to the equity owners of corporations, and elevate management to untouchable status. In a neutral way, of course.
[1] See Chairman Paul S. Atkins, Keynote Address at the John L. Weinberg Center for Corporate Governance’s 25th Anniversary Gala (Oct. 9, 2025).
