Investors Call on Companies to Respect the SEC’s Eight-Decade-Old Rule Governing Shareholder Proposals
In an “Open Letter,” Investors Cite Risks to All Parties Should Investor Access to the Company Proxy Be Impeded Through the Repeal of the Rule.
NEW YORK, NY, MONDAY, NOVEMBER 2, 2026 – Today investors released an open letter to the business community urging companies to oppose the Securities and Exchange Commission’s proposed rescission of Rule 14 a-8, which governs the process by which shareholders can present proposals to management and their fellow shareholders for consideration and votes at annual meetings. The letter was spearheaded by the Interfaith Center on Corporate Responsibility (ICCR), and was supported by nearly 100 institutional investors, with assets under management totaling $2.3 trillion in AUM.
The SEC released a proposed rule in September that would rescind its own rule enabling shareholder proposals, which has been in place since 1942 pursuant to the 1934 Securities Exchange Act. The “34 Act”, as it is known, created the SEC as well as a set of investor protections in response to the corporate abuses and lack of transparency which led to the disastrous stock market crash of 1929. The shareholder proposal rule was part of the package of reforms that came out of that era, and has been in place for over eight decades and through 14 Presidential administrations.
The SEC’s rescission proposal will create a corporate governance vacuum, leaving responsibility for weighing corporate proxy access to the states, a role they have never had to assume. The SEC’s move will leave investors and companies without a formal mechanism for communication of shareholder concerns, and will create a great deal of legal uncertainty for companies.
The SEC has opened a formal comment period through November 20th. In the open letter, investors are requesting that companies register their dissent with the SEC’s proposal to rescind 14a-8 by submitting a formal comment and, further, that they establish a corporate policy that ensures that shareholders can file proposals should Rule 14a-8 be rescinded.
Josh Zinner, ICCR’s CEO, said, “Investors see this SEC action as the needless dismantling of a cost-effective and well-functioning system that allows for open communication and the exchange of key information between management and shareholders. Public companies must recognize that a disruption of this system will eliminate a key mechanism to mitigate long-term risk, and lead to legal uncertainty and financial burdens for all parties. As a matter of good corporate governance, we ask that companies speak out in this critical debate and protect this time-tested process.”
In their proposals, shareholders often request corporate disclosures they believe are material to their investments or policy adjustments they see as crucial to good governance and the adequate management of risk. Under the current system, if their proposals meet the rigorous SEC criteria necessary to allow them to appear on the corporate proxy and go to a vote, they provide a strong signal of investor sentiment that often acts as an early warning system to flag unseen risk. The investors say, in the absence of Rule 14a-8, that many companies may not voluntarily place these proposals on their proxy, stifling a critical avenue for investor communication and thwarting a practical, effective risk mitigation mechanism. Further, without federal guidelines, investors may need to resort to other, more costly ways to register their concerns, such as court cases, negative publicity, or vote-no campaigns against board directors or other management proposals.
“For retirees and retail investors whose savings are invested in public companies, the ability to file a federally regulated shareholder proposal is the strongest available tool to sound an early warning on issues jeopardizing long-term share value,” said Sanford Lewis of the Shareholder Rights Group. “Taking that tool away is not a cost saving for anyone. It allows corporate vulnerabilities and blind spots to grow into costly losses for the company and its shareholders.”
Signatories to the letter include ICCR members and other institutional investors, including a representative of the conservative shareholder advocacy organization, National Legal and Policy Center. ICCR members, and many of the signatories of the open letter, have been active shareholder proponents in regular dialogue with their portfolio companies around a range of issues and have been conscientiously voting their proxies on all proposals, both shareholder- and management-sponsored, for more than 50 years.
Sonia Kowal, President of Zevin Asset Management, which regularly invokes the 14a-8 process to engage companies on a range of governance concerns on behalf of their clients, said, “The SEC regularly hears from trade associations and legal advocacy groups. It also needs to hear directly from the companies that benefit from constructive dialogue with their shareholders. We ask companies to make that case to the SEC, preferably through a formal comment letter or a public statement. We also encourage them to keep accepting shareholder proposals even if the rule is rescinded.”
Said Tim Smith, ICCR’s Senior Policy Advisor, “The fight to retain 14a-8 as a tool to bring attention to shareholder concerns has broad appeal from all quarters of the investor community and discussions with companies about how shareholder rights can be protected are actively ongoing, including through the filing of proposals requesting policies to codify those rights. Companies that are willing to regularly engage with their shareholders through both dialogue and the proxy process demonstrate that they are open to hearing views from a range of investors with other perspectives and are guarding against the kind of insularity that may exacerbate risk. We are hopeful these companies will heed this call and weigh in on this vital issue for their investors.”
Read the Letter to the Business Community Here.
CONTACT
Tim Smith
Senior Policy Advisor, ICCR
617-733-0086
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on LinkedIn, and Bsky.
