SEC Chair Charts Path to Exclude Precatory Shareholder Proposals

The remarks direct companies toward counsel‑backed no‑action requests as state law will determine what shareholders may properly propose.

Overview

Paul S. Atkins said companies may seek SEC no‑action relief to omit nonbinding proposals if counsel opines they are not a proper subject under state law, adding he has high confidence staff would respect that view.
A September 17 SEC Policy Statement indicated that adopting mandatory arbitration for shareholder claims would not affect the agency’s decisions to declare registration statements effective.
Atkins promoted mandatory arbitration and loser‑pays fee‑shifting as tools to deter frivolous suits, even as Delaware law currently disallows such measures for stock corporations and does not permit the identified arbitration approach.
Texas now allows higher ownership thresholds to submit proposals, and Atkins suggested such state requirements could support exclusion under Rule 14a‑8(i)(1), with preemption and judicial review still open questions.
The SEC is reassessing Rule 14a‑8’s 1942 rationale, and early adopters of these strategies should expect potential litigation and possible certification of state‑law questions to the Delaware Supreme Court.