SEC Move Could Silence Investor Voices as Companies Gain Power to Block Shareholder Proposals

In a sweeping shift with major implications for corporate governance, the U.S. Securities and Exchange Commission (SEC) announced that it will stop issuing opinions on companies’ requests to exclude shareholder proposals from proxy materials during the 2025–2026 proxy season. The move effectively gives companies broad latitude to block investor driven proposals - including those related to climate change, sustainability and workforce diversity - from ever reaching a vote at annual meetings.

In its statement, the SEC said it “has determined to not respond to no-action requests for, and express no views on, companies’ intended reliance on any basis for exclusion of shareholder proposals,” citing resource constraints following a prolonged government shutdown.

However, the announcement follows weeks of signals from SEC Chair Paul Atkins that the agency intends to overhaul the shareholder proposal process, particularly targeting ESG-related submissions. Atkins has repeatedly argued that shareholder proposals on environmental, social, and political issues “frequently involve issues not material to the company’s business,” yet demand substantial management time and cost.

In October, Atkins pushed for a reassessment of the landmark Rule 14a-8 -the 1942 rule that gives investors the right to include proposals in corporate proxy statements -as part of a broader effort to “de-politicize shareholder meetings.” More recently, he suggested new actions aimed at limiting the influence of proxy advisers and large institutional investors, warning of what he called “abuse of the corporate governance system and weaponization of shareholder proposals by politicized shareholder activists.”

Under the SEC’s new approach, companies must still notify the Commission of their intent to exclude a proposal, but the requirement is now “informational only,” and companies are no longer obliged to seek or wait for SEC staff approval before barring a proposal from a vote.

The reaction from within the Commission was swift and fierce. Commissioner Caroline Crenshaw condemned the shift as “an act of hostility toward shareholders” and warned that the decision gives companies “a hall pass to do whatever they want.”

Crenshaw said the policy “effectively creates unqualified permission for companies to silence investor voices (with ‘no objection’ from the Commission),” adding:

“This is the latest in a parade of actions by this Commission that will ring the death knell for corporate governance and shareholder democracy, deny voice to the equity owners of corporations, and elevate management to untouchable status.”

The change stands to dramatically reshape the upcoming proxy season - and potentially the balance of power between corporate management and the shareholders who own the companies they run.