Two shareholder advocates argue companies are better off with Rule 14a-8 than without it

The case for welcoming repeal is easy to state, and the two authors state it themselves: "Companies that treat the SEC's shareholder proposal process as an inconvenience or annoyance may be tempted to welcome its burial," wrote Sanford Lewis and Paul Rissman ^[4]. They then take the other side. They describe themselves as shareholder advocates who "have spent years on the proponent side of this process" ^[5]. That is an interest the reader should weigh. They also concede ground: "We are not going to argue that Rule 14a-8 is perfect" ^[6].

A company's grounds for keeping a proposal off its proxy statement are written into the rule. According to the authors, the rule limits which proposals qualify and adds "additional exclusions for proposals that might otherwise be permissible under state law" ^[10]. One is the relevance test in Rule 14a-8(i)(5), which permits exclusion of a proposal touching less than five percent of assets, earnings or sales, unless it is "otherwise significantly related to the company's business" ^[8]. The authors note that the exception has been litigated, citing Lovenheim v. Iroquois Brands (D.D.C. 1985), and refined by staff guidance ^[8]. None of these tools, they say, has an analogue in state corporate law ^[9].

The liability argument is narrower. Lewis and Rissman write that "Excluding a proposal without a rule circumscribing what must be disclosed also potentially creates a risk of companies being charged with a material omission under the federal securities laws' antifraud provisions" ^[19]. It is a legal theory from advocates, and they hedge it with the word "potentially."

The authority question draws the sharpest language. The authors say the SEC's release describes Rule 14a-8 as a federal overlay that accreted without discipline ^[17]. They call the Commission's position "a remarkable turnabout from the SEC's own eighty-year practice" ^[16]. By the 1942 adoption date, the rule is 84 years old ^[18].

The comment period runs 60 days, from September 21 to November 20 ^[13]. Lewis and Rissman call it a short window ^[7] and say "Every U.S. public company now has a decision to make, and not making it is itself a choice" ^[11]. We think the narrower claim is the stronger one: a company that relies on its exclusion grounds has until November 20 to say so on the record. The broader forecast is that repeal opens "the can of worms" ^[12]. That is a prediction, and the post does not describe what shareholder engagement would look like afterward or when the Commission would act on the comments.