States Begin to React: Delaware Corporation Law Council to Consider Statutory Response to Proposed Rescission of Rule 14a-8
Two days after the SEC proposed to rescind Rule 14a-8, the Council of the Corporation Law Section of the Delaware State Bar Association announced that it is folding the potential repeal into its annual review of Delaware’s corporate statutes — the first formal signal that the state law framework for shareholder proposals may be revisited.
On September 18, 2026, the Council of the Corporation Law Section of the Delaware State Bar Association (the “Council”) issued a statement noting that the Council is incorporating the proposal of the Securities and Exchange Commission (the “SEC”) to rescind Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Rule 14a-8”), into its annual review of Delaware’s corporate statutes.[1] The Council stated that it may formulate proposed statutory amendments as a result of that review, which, if approved by the Corporation Law Section and the Executive Committee of the Delaware State Bar Association, would be recommended to the Delaware General Assembly.
As we discussed in our client alert on the SEC’s proposed rule to rescind Rule 14a-8,[2] rescission of Rule 14a-8 would shift the regulation of shareholder proposals from a uniform federal framework to state corporate law and, potentially, company governing documents, and we noted that states would need to act to provide clarity to companies and shareholders. The Delaware statement, issued within 48 hours of the SEC’s proposing release, confirms that this process is now underway.
The Delaware Process and Timing
The statement is deliberately measured: it commits the Council only to consider the issue and says that amendments “may” result. That caution reflects the consensus-driven process by which the Delaware General Corporation Law (the “DGCL”) is amended each year — generally, the Council develops proposals, the Section and the Delaware State Bar Association’s Executive Committee approve them, and the General Assembly enacts them before its session ends in June, with amendments signed by the Governor typically becoming effective on August 1. Therefore, even if the Council moves promptly, any resulting DGCL changes would most likely take effect on August 1, 2027, at the earliest — after the 2027 proxy season, and consistent with the SEC’s own likely timing for any final rule.
Open Questions Under State Law
One of the SEC’s key rationales for the proposing rescission of Rule 14a-8 is that determining which matters are proper subjects for shareholder action is a question reserved to state law.[3] The DGCL currently does not answer the questions Rule 14a-8 has answered for more than eight decades: whether precatory proposals are proper subjects for shareholder action; what other topics are or are not appropriate for shareholder action; what ownership, holding-period and solicitation requirements apply to proponents; whether companies must include proposals in their own proxy materials; and who determines whether a proponent has complied, in the absence of the Division of Corporation Finance’s former role as an informal referee.[4] These are among the questions the Council could consider.
Other States Have Already Acted
Delaware will not be the first state to act. In 2025, Texas enacted Section 21.373 of the Texas Business Organizations Code, which permits qualifying Texas corporations to adopt bylaw or charter provisions restricting the submission of shareholder proposals to holders meeting specified ownership thresholds and other conditions.[5] With Delaware now formally engaged, companies should expect the leading incorporation states to approach these questions with their own policy priorities and statutory tools — and a company’s state of incorporation may become a more consequential variable in its shareholder proposal exposure than at any time since 1942.
Key Takeaways and Action Items
Delaware companies should wait for the Council. The Delaware statement reinforces our view that it is premature to adopt “proposal access” or other Rule 14a-8-like provisions in governing documents. Delaware law on these questions may change within the next legislative cycle, and any such provisions must be consistent with it.
Rule 14a-8 still governs the 2027 season. Companies should continue to administer the 2027 shareholder proposal process under Rule 14a-8, mindful that the Division no longer responds to notices of intent to exclude and that proponent litigation increased during the 2026 season.
We will continue to monitor developments in Delaware and other states and will provide updates as developments warrant.
[1] Statement of the Council of the Corporation Law Section of the Delaware State Bar Association (Sept. 18, 2026), available at https://www.dsba.org/.
[2] Gibson Dunn, SEC Proposes to Eliminate Federal Shareholder Proposal Rule and Modernize Proxy Solicitation Process (Sept. 21, 2026).
[3] The Rule 14a-8 Proposing Release is available at https://www.sec.gov/files/rules/proposed/2026/34-106383.pdf.
[4] See Kyle A. Pinder, The Non-Binding Bind: Reframing Precatory Stockholder Proposals Under Delaware Law, 15 Mich. Bus. & Entrepreneurial L. Rev. 1 (2026), available at: https://repository.law.umich.edu/mbelr/vol15/iss1/2 (concluding that Delaware law does not provide an inherent precatory proposal right).
[5] Tex. Bus. Orgs. Code § 21.373. See also Elizabeth Ising, Ronald Mueller, Julia Lapitskaya & Michael Svedman, Considerations for Shareholder Proposals in a Post-Rule 14a-8 World, Harv. L. Sch. F. on Corp. Governance (June 15, 2026), available at https://corpgov.law.harvard.edu/2026/06/15/considerations-for-shareholder-proposals-in-a-post-rule-14a-8-world/.