SEC Halts No-Action Letters for Shareholder Proposal Exclusions
Public companies and their counsel must now decide alone whether to exclude shareholder proposals under Rule 14a-8, as the SEC Division of Corporation Finance will no longer issue no-action letters for any exclusion basis, including the previously exempt Rule 14a-8(i)(1) category.
Effective immediately, the SEC’s Division of Corporation Finance has discontinued its practice of responding to no-action requests regarding the exclusion of shareholder proposals under Exchange Act Rule 14a-8. This ends a year-long pilot program that had already suspended responses for most exclusion bases except Rule 14a-8(i)(1). The Division received no requests under that narrow exception during the pilot period. Companies must still file required notices with the SEC and the proponent at least 80 days before the proxy filing, using the new online Shareholder Proposal Form, but will receive no staff guidance on whether the SEC would object to the exclusion. The Division of Investment Management is adopting a parallel approach for investment companies. In-house counsel and corporate secretaries should prepare to evaluate exclusion grounds without SEC staff input and ensure timely, proper notice filings.