In November 2025, the Division of Corporate Finance (the “Staff”) of the Securities and Exchange Commission (the “SEC”) announced that it would no longer provide substantive responses to most no-action requests for shareholder proposals during this proxy season. Since this announcement (the “Announcement”), public companies have found themselves in uncharted territory. While companies may request a response from the Staff with an unqualified representation that the company has a reasonable basis to exclude the proposal under Rule 14a-8, the Staff will only issue a no-action response based on the unqualified representation, and not based on any independent analysis of the merits of the arguments presented. Without the added reassurance of the SEC’s substantive review, a number of companies have refreshed their strategical approach to no-action letters this proxy season. The exclusion notices[1] that have been filed since the Announcement provide a glimpse into emerging trends regarding how companies and their legal counsel are interpreting the announcement and navigating this unguided landscape.
Trends and Insights
Scope of Letters
The shift from a substantive argument that would be evaluated on its merits by the Staff to a notice of exclusion (which could be submitted without an unqualified representation, if the company did not want a response from the SEC) raised the possibility that the letters could become more succinct, giving rise to concern that there would be more limited detail provided on why a company excluded a particular shareholder proposal. The Staff noted in the Announcement that “a company’s Rule 14a-8(j) notification should be limited to the information required by the rule” and, in a subsequent public discussion, confirmed that a simple notice of exclusion limited to the proposal and the company’s reason for exclusion was sufficient. However, out of the 80 exclusion notices filed by companies under this new process and responded to by the Staff through [•], 2026, 75 were of similar scope and format to those filed before the SEC announcement, substantively arguing the merits of an exclusion. Only four notices were limited in scope, stating only the basis for exclusion and the rule upon which they relied, without further analysis. The trend of companies including detailed explanations, despite the SEC indicating that the contrary is acceptable, may be an attempt to satisfy investor and other stakeholder concerns, provide a better understanding of the companies’ rationale from a governance perspective, and mitigate some of the potential risk of complaints or legal challenges by proponents.
Basis for Exclusion
Because the Staff declined to comment on the substance of no-action requests, procedural grounds were expected to gain more footing. However, this has not been the case. Among the 103 bases used in notices of exclusion on or after the Announcement, 78 (74%) were substantive arguments. This is on par with last proxy season, where 130 (66%) of the bases used in no-action requests were substantive arguments. Less than a majority of the bases used post-Announcement were based on procedural grounds, demonstrating that companies have continued to use notice of exclusion to exclude shareholder proposals on substantive grounds even after the SEC stopped commenting on their merits.
If we look deeper into individual bases of exclusion, there is some change in those used. In the past two proxy seasons, the ordinary business basis of Rule 14a-8(i)(7) was by far the most used, with more than one-third of all bases used being the ordinary business basis. The popularity of the ordinary business still stands, with it being the most used basis and approximately 22% of all bases used in post-Announcement notice of exclusions. A close second is the substantial implementation basis of Rule 14a-8(i)(10). In the past two proxy seasons, this basis was lower in popularity, making up 7.8% and 11.6% of the total number of bases used, respectively. This year, this number has jumped to nearly 20% of all bases used, suggesting increased popularity post Announcement.
One basis under which the Staff is continuing their review is Rule 14a-8(i)(1), which allows exclusion of proposals that are improper under state law. In the Announcement, the Staff explained that this exception is due to recent developments and lack of guidance regarding the application of state law and Rule 14a-8(i)(1) to precatory proposals, which are drafted as recommendations to the board and do not require the board to take action even if approved by shareholders. This was following SEC Chair Paul Atkins’s recent speech where he hinted that Delaware law does not confer on shareholders an inherent right to vote on precatory proposals. Despite this exception, there have not been any no-action requests filed on this basis since the Announcement.
Key Items for Further Consideration
Beyond just the exclusion of proposals via the submission of Rule 14a-8(j) notices, companies should also consider the following items as the proxy season progresses:
- Companies should consider whether to address the exclusion of shareholder proposals in their proxy statements. Out of five companies that filed a Proxy Statement after filing an exclusion notice this season, only two have included the excluded proposals in their filings. Institutional Shareholder Services (“ISS”) recently stated in its guidance that “Companies choosing to exclude a proposal on ‘ordinary business’ grounds should clearly explain why they believe that to be the case, and when there is precedent from the SEC or a court that appears relevant to the proposal in question, why they believe such a precedent does or does not apply.” ISS further expanded on this guidance in a recent webcast, where an ISS representative explained that if companies feel their no-action request “sufficiently explained why the company… decided to exclude the proposal,” it could potentially stand on its own. However, if the exclusion notice is brief, further explanation in the proxy statement would be needed.
- Separate from any statements made in connection with ISS’s guidance, companies should also consider whether to identify excluded proposals in the proxy statement pursuant to Rule 14a-4(c)(2) and note that the Board would exercise discretionary voting authority against them if they were brought as floor proposals. Historically, companies have not provided details about potential floor proposals in the disclosures around discretionary authority, but practices could change in light of these latest developments. So far, only one company that filed a Proxy Statement this season after filing a notice of exclusion included the proposal in its proxy statement and noted that it has been advised that the proponent intends to submit the proposal at the shareholder meeting, and recommended voting against the proposal.
ENDNOTE
[1] Given the change in approach and the purpose of the letters, we will refer to the letters filed after the Announcement as exclusion notices.
This post is based on a Cleary Gottlieb Steen & Hamilton LLP memorandum, “The NAL Landscape Post-SEC Announcement,” dated January 27, 2026, and available here.