SEC Proposed Elimination of Shareholder Rule

The agency has moved to scrap a regulation in place since 1942 that governs shareholder proposals.

Updated on Sept. 18, 2026 in Public Companies

Bold flat-color editorial illustration in navy and cream with deep red accents, featuring a stylized stone archway and a brass weight. — The Securities and Exchange Commission has proposed shifting the regulatory oversight of shareholder proposals from federal authority to individual state governments. AI Illustration. Upload story photo >

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The Securities and Exchange Commission has proposed ending the federal rule that governs the shareholder proposal process. This change would shift the authority to regulate such proposals to individual states.

Why it matters

The proposal aligns with the commission's regulatory priorities and follows the agency's decision to stop reviewing company choices to exclude proposals earlier this year.

The shareholder proposal rule has been in effect for 80 years since its adoption in 1942. The proposal is currently subject to a 60-day public comment period before finalization.

The players

Securities and Exchange Commission

This federal agency is responsible for protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.

The details

Companies currently notify the Securities and Exchange Commission of decisions to exclude proposals from annual proxy statements, a process the agency halted earlier this year. The agency seeks to transition this regulatory oversight to state-level authorities.

The shareholder proposal rule was originally adopted in 1942.
The SEC stopped reviewing proposal exclusion decisions earlier this year.
The proposal to eliminate the rule was issued in September 2026.
The public comment period for the proposal will last for 60 days.

Market Landscape

The elimination of the 1942 Securities and Exchange Commission shareholder proposal rule marks a departure from eight decades of federal oversight for public company governance. This shift signals a broader move to decentralize corporate oversight by moving regulatory control to the state level.

Investors may face a fragmented landscape where proxy proposal rules differ significantly depending on the state of incorporation. This change could complicate how shareholders influence corporate policy across different regional jurisdictions.

The takeaway

Shareholders should prepare for a potential shift in how proxy proposals are handled as regulatory authority moves away from federal oversight. Staying informed on state-level corporate governance laws will be essential for those seeking to participate in company voting processes.