SEC Proposes to Kill the Rule That Lets Shareholders Force Corporate Votes

The Securities and Exchange Commission is advancing a plan to scrap Rule 14a-8, the regulation that has let shareholders force corporate proposals onto annual meeting ballots since the early 1940s, with the measure currently under White House review before a formal Commission vote.

SEC Commissioner Mark T. Uyeda laid out the reasoning in a statement posted to SEC.gov. Federal securities law, he wrote, gives the Commission authority to regulate disclosure, not to referee internal corporate governance. That, he said, is the states' job. "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," Uyeda wrote.

The plan also includes amending Rule 14a-4 to expand when companies can use discretionary voting authority, plus a broader modernization of proxy solicitation rules.

Atkins Has Been Building to This

SEC Chairman Paul Atkins has criticized Rule 14a-8 since his earlier stint as a commissioner, according to Bloomberg reporting by Lydia Beyoud. He's called it a vehicle for "the tyranny of the minority," arguing a small number of activist shareholders use it to push agendas, particularly on climate and social issues, that have nothing to do with a company's actual business.

The numbers back up part of his complaint. A Freshfields analysis of the 2025 proxy season found social-issue proposals made up 43% of all shareholder filings examined, according to Bloomberg. Many of those proposals draw minimal shareholder support even when they make the ballot.

An SEC spokesperson told Bloomberg the agency wants to "return the role of regulating shareholder proposals to the States." The plan first surfaced publicly in a White House Office of Management and Budget notice published August 31, after the SEC submitted it for review the prior week. Once OMB finishes its review, the three-member commission will vote on whether to formally propose the measure and open it for a typical 60-day public comment period before any final rule could take effect.

The Tool Cuts Both Ways

Rule 14a-8 isn't just a progressive weapon. It's also the exact mechanism a faith-based investment firm used just over a week ago to challenge Nike on the opposite end of the political spectrum.

Nike shareholders voted down Proposal 5 at the company's September 8 annual meeting, according to Fox News. The proposal, filed through Inspire Investing on behalf of client William C. Cunningham, asked Nike to produce a report assessing the legal, reputational and financial risks tied to its charitable giving.

Inspire portfolio manager Tim Schwarzenberger pointed specifically to Nike's perfect score of 100 on the Human Rights Campaign's Corporate Equality Index, and asked whether Nike's health plan covers gender-transition procedures for minor dependents, including surgery, hormone therapy and puberty blockers. Nike's public HRC profile doesn't disclose age limits or dependent-specific terms, and Schwarzenberger said Nike hasn't answered the question directly. Nike's board recommended shareholders reject the proposal, saying in its 2026 proxy statement that the company already evaluates those risks through its existing processes.

Schwarzenberger told Fox News he'd happily buy Nike again if the company changed course. "If companies make changes, we need to applaud them," he said.

Rule 14a-8 made that proposal possible. It reached a shareholder vote because the rule exists. If the SEC rescinds it, faith-based and conservative investors lose the same federal on-ramp that ESG and social-justice shareholders have used for years. Atkins' plan doesn't distinguish between the two.

A Parallel Fight Over Proxy Data

The SEC's push against shareholder activism is also playing out in court against Institutional Shareholder Services, one of the two dominant proxy advisory firms alongside Glass Lewis, according to the Epoch Times. The SEC filed an action September 4 in the U.S. District Court for the Eastern District of Pennsylvania seeking to force ISS to comply with a July subpoena for client voting and recommendation data.

The SEC says this is a fact-finding investigation and has not accused ISS of misconduct. ISS agreed to hand over records identifying clients and its vote-handling agreements, but balked at turning over an unredacted export of voting data from its ProxyExchange platform, proposing instead to anonymize it, citing the sensitivity of client voting strategies. ISS also pointed to a December 2025 executive order from President Trump that called for greater federal scrutiny of proxy advisers, arguing that handing over identifiable client data could expose firms to what it called "retaliatory actions."

No charges have been filed against ISS. The dispute is now before a federal judge, who will decide whether the SEC's subpoena stands as written or whether ISS's anonymization proposal is sufficient.

Both fights point the same direction: less room for the proxy mechanism that activist investors, of any political stripe, have used to make companies answer for their politics. Whether Congress or the states step in to fill that vacuum, or whether corporate boards simply gain freer rein, remains an open question the SEC's rulemaking process won't resolve for months.