The SEC stopped grading exclusions, so issuers now mark their own proxy ballots

The SEC's staff has told issuers it will generally not respond substantively when a company asks for permission to keep a shareholder proposal off its proxy ballot, a policy first announced on November 17, 2025 and covering the 2025-2026 proxy season through September 30, 2026 ^[1][2][3]. That is about 317 days in which the practical decision on what shareholders vote on sits with the company proposing to exclude the vote ^[14].

Mechanically, the change is small and the consequence is not. Under the prior process, a company filing a no-action request under Exchange Act Rule 14a-8 got staff review: the proposal was read, the company's arguments were weighed, and a letter came back agreeing or disagreeing with exclusion ^[4]. Now, according to the Reuters account carried by Crypto Briefing, staff will issue what amounts to a "no objection" letter when a company supplies a rationale grounded in existing rules or judicial precedent, without assessing whether the rationale actually holds ^[5]. The agency pointed to resource constraints following a government shutdown and to the volume of prior guidance already on the record ^[6].

The procedural furniture is intact. Companies must still send the 80-day notice under Rule 14a-8(j) when they intend to exclude a proposal ^[7]. The single carve-out identified so far is Rule 14a-8(i)(1), covering proposals improper under state law, where staff will still engage ^[8]. Everything else runs on the issuer's own reading of the rule.

Investor groups have pushed back and asked the SEC either to restore the old process or to build a replacement that preserves meaningful review ^[9]. Their objection is not that staff letters were binding, because they never were ^[10]. It is that the letters were a cheap, fast signal of how the agency would treat a dispute if it escalated, and removing the signal leaves both sides guessing ^[10][11]. Note who that cuts against in the medium term: a company that excludes a proposal without staff concurrence is more exposed to a proponent suing over improper exclusion, not less ^[11]. Unilateral discretion arrives bundled with unilateral risk.

The early evidence is less dramatic than the framing suggests. Correspondence through mid-2026 shows many shareholder proposals continuing to reach a vote even without staff input ^[12]. Governance disputes have a way of finding a new venue rather than disappearing, and the obvious one is the proxy advisers. ISS and Glass Lewis may absorb part of the vacated function, and if a company excludes a proposal those firms regard as legitimate, the response can be a negative recommendation on management's own ballot items ^[13].

Two things to watch. First, whether the carve-out list stays at one item or grows as issuers test the boundaries of (i)(7) and (i)(10) with no referee present ^[8]. Second, litigation: the first proponent to win an improper-exclusion case will reprice the cost of a form-letter exclusion faster than any comment letter campaign ^[11].