Your Vote, Their Permission: Why Shareholder Proposal Rights in the US Are Under Existential Threat
20 March 2026
By Sarah Wilson
The Interfaith Center on Corporate Responsibility (ICCR) and As You Sow have filed a lawsuit against the US Securities and Exchange Commission (SEC) challenging the controversial overhaul of its ‘no action’ request process adopted in November 2025.
The case filed in the US District Court for the District of Columbia is also against Commission Chair Paul Atkins and Commissioners Hester Peirce and Mark Uyeda. The SEC’s controversial shift in ‘no action’ approach for the 2026 proxy season saw substantive staff review of shareholder proposal disputes be replaced with a process that, in the words of former Commissioner Caroline Crenshaw, amounts to a “rubber stamp”.
The case matters because it tests whether shareholder proposal rights in the US can survive a regulator that has stepped back from governance review while simultaneously preparing formal rulemaking that could remove the mechanism entirely.
What the lawsuit argues
The complaint brings three claims under the Administrative Procedure Act. The lawsuit argues that No-Objection Policy contradicts the SEC’s own Rule 14a-8 by eliminating the burden of persuasion that the rule places on companies and negating the proponent’s right to submit a response and have it considered. The policy’s stated justifications that resource constraints from the government shutdown and the sufficiency of existing guidance do not withstand scrutiny given that the SEC itself had announced in October 2025 that it intended to resume review after the shutdown ended. These justifications were reiterated by Commission Chair Atkins earlier this month. The policy amounts to a substantive rule change that required notice-and-comment rulemaking and a Commission vote, neither of which occurred.
The Royal Gold example showcased in the complaint illustrates the practical effect. As You Sow received notice on 12 January 2026 that the company intended to exclude its proposal. It notified the SEC the following day that a response was forthcoming. The SEC issued a no-objection letter two days later, before any response had been submitted. Under the prior process, staff would have considered both sides. Under the new process, the company’s own assertion was treated as definitive.
The structural problem
This lawsuit highlights the underlying problem is that US shareholder proposal rights have never been grounded in company law. In every other major developed market, the right to propose a resolution at a company meeting is a statutory entitlement derived from share ownership, a property right that is adjudicated by the courts and durable across changes of government. The US routed this right through a securities regulator instead, meaning it can be withdrawn by administrative action without legislative process. Which is exactly what has happened.
The DC Circuit drew the boundary clearly in Business Roundtable v. SEC (1990): Section 14(a) authorises the SEC to regulate the proxy process, not the substance of governance. That boundary means the SEC has no legal authority to defend if a court or a future Commission decides shareholder proposal arbitration was never within its remit. For investors, the implication is stark: the stewardship tools they rely on in the US exist at the discretion of an institution that does not consider itself obligated to provide them and can withdraw them at any point without legislative approval, public consultation, or a Commission vote.
That is not a hypothetical risk. It is a description of what happened in November 2025, when shareholders were stripped of protections they had relied on for over eighty years by a staff bulletin issued during a government shutdown. As the US has no equivalent of the UK’s Financial Reporting Council, when the SEC steps back from governance, there is no receiving institution. The functions simply disappear.
2026 Proxy Season Impacts
Minerva Analytics has observed that the SEC’s shift in approach towards ‘no action’ requests has severely heightened uncertainty for both shareholders and companies. The change makes it easier for companies to exclude shareholder proposals from proxy materials, which had been predicted to potentially trigger a further drop in US resolution numbers. This change has also led to a shift in client questions from ‘how should we vote?’ to ‘will this proposal even appear on the ballot?’.
The overhaul also creates heightened legal risks for companies – an issue that the ICCR had warned about – which has seen AT&T, Axon, Chubb and PepsiCo among others be sued by shareholders over excluded proposals. This has secured some success for shareholders, with AT&T and PepsiCo u-turning on their decisions to reject the resolutions. It has also seen some companies exercise caution by including proposals that they had previously filed ‘no action requests against and others file no such requests for the first time in several years.
The overall number of ‘no action’ requests for the 2026 proxy season compared to 2025 does not appear to have been majorly impacted by the SEC shift, however. According to the SEC site, up to 19 March 2026 there were 189 ‘no action’ request letters listed, up only slightly on the 184 such requests during the 2025 proxy season up to 19 March 2025. It is worth noting that some of the proposals in both the 2025 and 2026 proxy seasons were withdrawn by proponents. The more dramatic difference was between the 2024 and 2025 proxy seasons, with just 133 ‘no action’ requests registered during the former until 19 March 2024.
ICCR earlier this year publicly questioned the SEC’s decision to not respond to ‘no action’ requests during the 2026 proxy season, while ICCR and As You Sow were among the investors that expressed concern over the Commission’s changes to the use of its EDGAR filing platform and exempt solicitation notices which risk detrimentally impacting ‘vote no’ investor campaigns.
How we got here – a 20-year surgical campaign
The ICCR and As You Sow complaint landed on the same day that Minerva Analytics completed a research paper that explains how the US arrived at this point. The paper sets the US shareholder proposal framework against the company law systems of six jurisdictions where rights are statutory and cannot be withdrawn by administrative action. It identifies the institutional vacuum that made the SEC’s withdrawal possible and it provides a critique of the forthcoming law review article that Chair Atkins relied on in his October 2025 keynote to justify reinterpreting Rule 14a‑8.
The article argues that silence in the Delaware statute means exclusion, converting an enabling framework into a prohibition. Tellingly, the author has since clarified at a Council of Institutional Investors webinar that he was not arguing that Delaware law prohibits precatory proposals. Nevertheless, the SEC Chair had used the paper to anchor his position before that clarification was made. Minerva also traces the two‑decade campaign linking Manhattan Institute research, Congressional testimony, and executive action and identifies the recurring evidential weaknesses in the data that underpin it. The full comparative table is included as an appendix. The paper is available to read in full here.
What comes next
If the lawsuit from ICCR and As You Sow succeeds, it would force the SEC to resume substantive review under the existing rule. That buys time, but it does not address the structural problem. The SEC’s April 2026 regulatory agenda already targets Rule 14a-8 for formal rulemaking.
For investors, the immediate question is operational: how reliably the shareholder proposal mechanism will function during the remainder of the 2026 proxy season. The longer-term question is more fundamental. The US capital markets risk premium has historically been underpinned by investor confidence in the rule of law, transparent regulation and enforceable shareholder rights.
When an eighty-year-old regulatory framework can be dismantled by staff bulletin, when the burden of proof can be reversed without a Commission vote and when the Chair of the securities regulator builds policy on an unpublished paper whose author disowns the interpretation, those foundations are no longer reliable. Investors pricing US equity exposure on the assumption that governance protections are stable need to reassess that assumption. Statutory codification of shareholder proposal rights, the norm in every comparable jurisdiction, is not a reform aspiration. It looks like the minimum condition for restoring the institutional credibility on which the US risk premium depends.
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Last Updated: 20 March 2026