In a keynote address, U.S. Securities & Exchange Commission Chairman Paul S. Atkins set out a priority to make public listing more attractive and reverse the decline in exchange-listed companies, citing a drop to about 4,700 listed companies from about 7,800 in 2007. He framed the agenda around simplifying and scaling disclosure, de-politicizing shareholder meetings, and reducing the cost of frivolous securities litigation, with remarks focused on shareholder proposals and litigation reform. On shareholder proposals, Atkins argued that Exchange Act Rule 14a-8 can be used only for proposals that are a “proper subject” for shareholder action under state law, and suggested that some non-binding or “precatory” proposals could be excludable under Rule 14a-8(i)(1) for Delaware-incorporated companies where state law and governing documents do not confer a right to vote on them, supported by an opinion of counsel. He also pointed to Texas’s recently effective opt-in shareholder proposal statute, which conditions eligibility on thresholds including at least USD 1 million in market value or three percent of voting shares, and said proposals failing valid state-law or charter/bylaw conditions should likewise be excludable under Rule 14a-8(i)(1), treating Rule 14a-8’s procedural standards as defaults that can be displaced by private ordering. Atkins said “Shareholder Proposal Modernization” is on the SEC’s policy agenda and that he has asked staff to reassess whether the Commission’s original rationale for adopting Rule 14a-8 in 1942 still holds, noting that any revisions would require a proposal and public comment before adoption. On litigation, he criticised Delaware’s recent restrictions in Senate Bill 95, including banning mandatory arbitration and extending fee-shifting prohibitions to federal securities law claims, and urged Delaware to revisit those choices following the SEC’s September 2025 view that mandatory arbitration provisions are not inconsistent with the federal securities laws.
U.S. Securities & Exchange Commission 2025-10-09
U.S. Securities & Exchange Commission chair calls for Rule 14a-8 modernization and tougher state-law gatekeeping on shareholder proposals
SEC Chairman Paul S. Atkins stressed enhancing public listings by simplifying disclosures, de-politicizing shareholder meetings, and cutting frivolous litigation costs. He suggested potential exclusions for non-binding shareholder proposals under Exchange Act Rule 14a-8, citing state laws and recent Texas statutes. Atkins criticized Delaware's Senate Bill 95 for limiting mandatory arbitration and extending fee-shifting prohibitions, urging reconsideration given the SEC's stance on arbitration provisions.