SEC to Limit Shareholders from Filing Voluntary Notices of Exempt Solicitation

By Guy Yedwab

In another step to limit shareholder participation in the proxy process, the SEC’s Division of Corporation Finance has reversed a policy that allowed shareholders to easily advocate to other shareholders through the EDGAR filing system.

Since 1992, shareholders can voice opinions on board nominees, proxy initiatives, or other corporate actions through solicitations, or shareholder communications, that are exempt from the expensive proxy filing requirements. However, these exempt solicitations still need to be distributed to shareholders, which can be expensive and time-consuming. For nearly a decade, however, shareholders have had the option of using the SEC’s EDGAR system to distribute these exempt solicitations through a notice process.

Under Exchange Act Rule 14a-103, shareholders who beneficially own over $5 million in securities and engage in solicitation related to those securities must file a Notice of Exempt Solicitation with the SEC. Since 2018, shareholders owning less than $5 million have been permitted to submit such notices voluntarily. Because the notices are available through the company’s EDGAR page on the SEC website, other shareholders could easily find solicitations voluntarily filed with the SEC, providing an avenue for spreading the word to other shareholders.

For example, in 2018, AES Corp. included in its proxy a proposal to ratify bylaws requiring 25% of the shareholders to call a special meeting. After the SEC permitted AES to exclude shareholder John Chevedden’s competing proposal to lower the threshold to 10%, Chevedden voluntarily filed a Notice of Exempt Solicitation containing a shareholder memo urging members to vote against the AES proposal. Thus, although Chevedden did not own more than $5 million of AES Corp. stock, voluntarily filing a Notice of Exempt Solicitation allowed Chevedden to make his case to other shareholders, even though he had been excluded from communicating through the proxy itself.

Since then, the SEC has had a policy of declining to object to such voluntary filings. Until now, Question 126.06 of the SEC’s Compliance and Disclosure Interpretations (“C&DIs”) simply required that the voluntary filer include a cover sheet clarifying that the Notice was being provided voluntarily, rather than being required due to the filer’s ownership of shares.

This policy is now reversed. As of January 23, 2026, the newly revised Question 126.06 stated that SEC staff will object to any Notice submitted by a filer who does not own more than $5 million in securities related to the solicitation. As justification, the SEC stated that “submission of such notices on EDGAR appears to be primarily a means to generate publicity,” which is not the filing’s “intended purpose.”

Alongside this change, C&DI Question 126.08 has been amended to note that the Notice of Exempt Solicitation “is not intended to be the means through which a person disseminates written soliciting material to security holders.” In other words, even for shareholders with over $5 million in holdings, such solicitation must first be pursued through other means in addition to being filed with the SEC, ensuring that shareholders must spend additional money to make their communication.

In addition to restricting access to the Notices, the SEC’s revised guidance addresses the content of the notices.

For the few shareholders with over $5m in holdings who have already distributed through other means, the revised C&DI Question 126.09 limits such notices to “only written communications that constitute a ‘solicitation’,” meaning it must refer to a specific proxy vote, and cannot urge general principles or policy of other shareholders. And the revised C&DI Question 126.10 reiterates that Notices are subject to rules preventing false or misleading statements, followed by examples of statements, including those “which directly or indirectly impugns character, integrity or personal reputation, or directly or indirectly makes charges concerning improper, illegal or immoral conduct or associations, without factual foundation.”

Without access to voluntarily submit Notices of Exempt Solicitation, shareholders with smaller holdings wishing to publicize their voting intentions will need to pursue more costly means, such as press releases. Shareholders with larger stakes must spend still more to weigh in.

These costs are not immaterial: according to Diligent Market Intelligence data, proxy solicitation fees for shareholders can run up to $200,000 for challengers, and shareholders budgeted to spend approximately $1.8 million for fights in the 2025 proxy season. In a fight where resources count, shareholders often have fewer resources than the companies themselves: a January 2026 survey by the University of Delaware’s Weinberg Center for Corporate Governance found that proponents of shareholder proposals largely have annual budgets of less than $100,000, whereas the majority of companies had annual budgets of more than $100,000 and spent far more on the solicitation process.

These changes come on the heels of other changes to how shareholders can advocate their interests.

In February 2025, the SEC promulgated Staff Legal Bulletin No. 14M, which broadened the SEC’s interpretation of what shareholder proposals can be excluded based on “economic relevance” or “ordinary business” grounds. The new interpretation requires the proponent to show that the proposal is tied to a significant effect on the company’s business.

In September 2025, as previously covered by the Pomerantz Monitor, the SEC reversed longstanding opposition to mandatory arbitrary provisions in initial public offerings, diminishing the protection of the securities laws for IPO investors.

Then, in November 2025, the SEC announced it would no longer review and respond to no-action requests for companies that wish to exclude shareholder proposals submitted pursuant to Rule 14a-8, unless the exclusion conflicts with state law. Where companies wish to receive a “no objection” letter from the SEC, the SEC will grant them one based solely on an “unqualified representation that the company has a reasonable basis to exclude” the proposal, according to a January 23, 2026 letter from the International Corporate Governance Network to the SEC in response to the changes. In short, the SEC is willing to take the company’s word that it has valid grounds to exclude shareholder proposals.

These changes are already having an effect on shareholder proxy proposals: according to the Harvard Law School Forum on Corporate Governance, shareholder proposals decreased 27.9% in 2025 from the prior year. The most notable decreases were in environmental (30%), social (32.7%) and governance (63.9%) issues.

More changes may be on the way: on December 11, 2025, President Trump issued the executive order, Protecting American Investors from Foreign-Owned and Politically Motivated Proxy Advisors. Citing the “significant role” of the “foreign-owned proxy advisors,” Institutional Shareholder Services Inc. and Glass, Lewis & Co., LLC, the order directs the SEC Chairman to “consider revising or rescinding all rules, regulations, guidance, bulletins, and memoranda relating to shareholder proposals,” especially to the extent that they implicate diversity, equity, and inclusion or environmental, social and governance policies.

These moves to limit shareholder participation may be out-of-step with the feelings of the participants in the process. The Weinberg Center’s survey found “[n]early-universal legitimacy” for governance proposals across shareholders, companies, company directors, and professionals. Notably, this is the category most drastically impacted by the SEC’s changes to the process in 2025, as seen in the data collected by the Harvard Law School Forum on Corporate Governance. Similarly, the Center found “[b]road agreement” in “[l]ow to moderate” satisfaction with the SEC.

Notably, many of these changes are being pursued as interpretive guidance, rather than changes to the SEC’s adopted rules. As such, it is unclear how lasting or legally binding these changes will be. The coming year will show how shareholders will adapt to or fight these new guidelines. Pomerantz will continue to lead efforts to protect shareholders’ ability to participate in shareholder democracy and ensure recompense for their damages under the law.