SEC Hands Companies Power to Exclude Shareholder Proposals, Sparking Investor Backlash
19 November 2025
The US Securities and Exchange Commission (SEC) will not respond to company ‘no action’ requests to exclude shareholder proposals during the 2026 proxy season, a move that hands unprecedented discretion to corporate management and threatens to sideline investor voices on key environmental and social issues.
Announced by the SEC’s Division of Corporation Finance, the decision – citing resource constraints after a federal shutdown – applies from 1 October 2025 through 30 September 2026. Companies can now block proposals without SEC staff review, potentially leaving litigation as shareholders’ only recourse.
Key Client Takeaways:
- No Action, No Oversight: Companies may exclude shareholder proposals under Rule 14a-8 without SEC input.
- ESG at Risk: Environmental and social proposals face the greatest threat, with management-friendly governance trends expected to accelerate.
- Legal Uncertainty: Shareholders may be forced into costly court battles to challenge exclusions.
Minerva Analytics data shows that 514 US shareholder proposals were filed between 1 January and 30 September 2025, with 41% from individuals, 18% from institutions and 14% from anti-ESG proponents – effectively debunking claims that only activists drive proposals.
The 2025 proxy season saw a 28% drop in US proposals, with social and environmental resolutions hit hardest. Only governance proposals succeeded, a trend likely to intensify in 2026.
The SEC’s move follows a series of rule changes under Chair Paul Atkins, including higher investment thresholds and tougher resubmission criteria, which have been covered by Minerva Analytics’ 2025 Proxy Season Review and Shareholder Proposal Voting Trends Report 2025. Commissioner Caroline Crenshaw slammed the decision as a “Trojan horse” that “hands companies a hall pass to do whatever they want,” warning it could “ring the death knell for corporate governance and shareholder democracy.”
Microsoft recently excluded a proposal without SEC ‘no action’ support, arguably helping to set a precedent for 2026. Meanwhile, Tesla’s reincorporation from Delaware to Texas highlights a growing trend of companies seeking states with management-friendly laws, as Texas ramps up its anti-ESG stance.
Republican-led attacks on Rule 14a-8 continue, with Congress scrutinizing whether shareholder proposals serve narrow activist goals or broader investor interests. Investor groups warn the SEC’s retreat leaves shareholders with only litigation to enforce their rights, injecting uncertainty into the market.
Minerva Analytics will publish a detailed client briefing next week on the implications of the SEC’s decision and the evolving landscape for shareholder rights.
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Last Updated: 19 November 2025