Shareholder proposals and precatory resolutions.

For three decades, the operational understanding of Rule 14a-8 shareholder-proposal practice has been: (i) the proposal is submitted under federal law (Rule 14a-8); (ii) the company may seek to exclude it on one or more of the thirteen substantive grounds in Rule 14a-8(i)(1)–(13); (iii) SEC Staff reviews the company's no-action request and either concurs (allowing exclusion) or does not concur (requiring inclusion); (iv) the proposal then proceeds to the proxy or does not. Of the thirteen substantive grounds, (i)(1) — "the proposal is not a proper subject for action by shareholders under the laws of the jurisdiction of the company's organization" — has been historically the least-invoked. Companies have not generally argued that precatory (non-binding) proposals are improper under state law.

That changed in October 2025. SEC Chair Paul Atkins's Keynote Address at the Weinberg Center for Corporate Governance specifically endorsed (i)(1)-grounded exclusion of precatory proposals where Delaware-counsel opinions support the position that Delaware law does not affirmatively authorize them. The November 17, 2025 SEC Division of Corporation Finance Statement on the Rule 14a-8 process retained substantive Staff review of (i)(1) requests while abandoning substantive review of the other twelve substantive grounds. Together, the two SEC actions made (i)(1) the principal staff-reviewed exclusion ground for shareholder-proposal exclusion requests in the 2025–2026 proxy season — and made Delaware-law treatment of precatory proposals the central federal-state interface.

This stream documents the doctrinal source (the Pinder article), the SEC Chair endorsement (Atkins keynote), the Staff procedural framework (Nov. 17, 2025 Statement), and the contested Delaware-law substantive question. It does not resolve the contested question; the Delaware Supreme Court has not adjudicated it, and Vice-Chancellor Strine (later Chief Justice) and Frank Balotti articulated opposite readings at the 2007 SEC roundtable that remain the foundational dialectic.

SEC Chair Paul Atkins delivered the keynote address at the John L. Weinberg Center for Corporate Governance's 25th Anniversary Gala on October 9, 2025. The keynote's substantive contribution to the Rule 14a-8 doctrine was Atkins's explicit statement that a Delaware-counsel opinion concluding that a precatory proposal is not a proper subject under Delaware law would carry significant weight with SEC Staff in evaluating a Rule 14a-8(i)(1) no-action request.

If a company makes this argument and seeks the SEC staff’s views, and the company obtains an opinion of counsel that the proposal is not a “proper subject” for shareholder action under Delaware law, this argument should prevail, at least for that company. I have high confidence that the SEC staff will honor this position.— Paul S. Atkins, Chair, U.S. Securities and Exchange Commission, Keynote Address at the John L. Weinberg Center for Corporate Governance's 25th Anniversary Gala (Oct. 9, 2025).

The Atkins statement is doctrinally consequential in three respects. First, it converts the historically dormant (i)(1) ground into an active exclusion channel. Second, it specifies the procedural vehicle: an opinion from Delaware counsel. Third, it commits the Chair's office to Staff deference to that opinion, which has the practical effect of reducing Staff substantive review of (i)(1) requests to the question of whether the opinion exists and is facially adequate, rather than whether the underlying Delaware-law analysis is correct.

The Weinberg Center is, importantly, the venue at which Atkins delivered the keynote referencing the article. Pinder is affiliated with Delaware corporate-law practice (Morris Nichols Arsht & Tunnell) and has presented related work at Weinberg Center events. The choice of venue for the Atkins keynote is consistent with the doctrinal-influence pathway from Pinder's law-review article to the SEC Chair's policy endorsement.

Rule 14a-8(i)(1) provides that a company may exclude a shareholder proposal from its proxy if "the proposal is not a proper subject for action by shareholders under the laws of the jurisdiction of the company's organization." Before October 2025, (i)(1) was the least-invoked of the thirteen Rule 14a-8 substantive grounds; companies typically relied on the more familiar (i)(2)–(13) grounds (procedural, ordinary-business, relevance, etc.). After the Atkins keynote and the Nov. 17, 2025 Division Statement, (i)(1) is the principal Staff-reviewed exclusion ground for the 2025–2026 proxy season.

The operational sequence

The post-Nov-17 (i)(1) exclusion sequence proceeds in four steps:

Step 1: opinion of counsel. The company obtains an opinion from Delaware counsel concluding that the specific precatory proposal in question is not a proper subject for stockholder action under applicable Delaware law. The opinion typically rests on the Pinder framework (DGCL § 141(a) + § 211 + historical practice) plus the specific drafting of the proposal at issue.

Step 2: Rule 14a-8(j) notice. The company files a Rule 14a-8(j) no-action request with the SEC Division of Corporation Finance at least 80 days before its definitive proxy statement is filed. The request includes the Delaware-counsel opinion. The 80-day filing requirement was not changed by the Nov. 17 Statement.

Step 3: Staff response (bifurcated). Per the Nov. 17 Statement, Staff will respond in one of two forms. Form A: a perfunctory "informational only" notice acknowledging receipt without expressing a substantive view on the merits. Form B: a "no objection" letter where the company files an unqualified representation that it has a reasonable basis for exclusion; Staff will not evaluate the adequacy of that representation but will acknowledge receipt and signal non-opposition. Both forms preserve the company's right to exclude; neither adjudicates the underlying Delaware-law question.

Step 4: proponent litigation backstop. A proponent dissatisfied with the company's exclusion may seek injunctive or declaratory relief in federal district court. The court must then adjudicate the Rule 14a-8(i)(1) substantive question — whether the precatory proposal is a proper subject for stockholder action under Delaware law — with the Delaware Supreme Court not having spoken on the controlling state-law question. The federal court must therefore apply Erie-style state-law prediction methodology, which is procedurally and substantively demanding for proponents.

Together, the four-step sequence shifts substantive review of the (i)(1) state-law question out of the SEC Staff process and into either (a) company-and-Delaware-counsel practice (Steps 1–3) or (b) federal-court litigation (Step 4). Neither venue has historically been where Rule 14a-8 (i)(1) doctrine has developed.

1. How does the Delaware Supreme Court (eventually) resolve the Strine-vs-Balotti seam?

The contested state-law question can reach the Delaware Supreme Court through several procedural pathways: certification of the state-law question to the Delaware Supreme Court under the 2007 Delaware constitutional certification procedure (Del. Const. art. IV, § 11(8); used by the SEC only once, in CA, Inc. v. AFSCME Employees Pension Plan, 953 A.2d 227 (Del. 2008)); a Delaware Chancery decision in a stockholder challenge that the Supreme Court affirms or reverses; or a direct stockholder action seeking declaratory relief on the state-law question. The first appellate-level Delaware decision on the question will be the most important corporate-law jurisprudence on shareholder proposals in a generation.

2. What share of (i)(1) requests are reviewed under Form A vs Form B?

The Nov. 17 Statement's bifurcated notice procedure (informational-only vs no-objection) preserves Staff discretion. The empirical question is the rate at which Staff issues each form and the substantive correlates of each. Form A (informational) provides no signal about Staff's view on the merits; Form B (no-objection) signals non-opposition. Both leave the underlying Delaware-law question unadjudicated, but Form B is operationally stronger for the excluding company.

3. How do federal courts apply Erie prediction in 14a-8(i)(1) litigation?

Federal courts adjudicating proponent challenges to (i)(1)-grounded exclusion must apply state-law prediction methodology to the contested Delaware question. The first federal-court (i)(1) decisions on the substantive Delaware-law question will be subject to interlocutory appeal and certification dynamics that have not been tested in this doctrinal space.

4. Does the Delaware Legislature respond?

The Delaware Legislature can foreclose either reading of the Strine-vs-Balotti seam by amending the DGCL to either explicitly authorize precatory proposals or explicitly prohibit them. The post-SB-21 Delaware Legislature has demonstrated willingness to legislate on contested corporate-law questions; a 2026 or 2027 DGCL amendment on precatory proposals is the most likely doctrinal endpoint.

5. Does Texas's TBOC § 21.373 adoption rate accelerate?

If the Delaware (i)(1) route becomes practically constrained — either by adverse federal-court litigation outcomes or by a Delaware Supreme Court decision narrowing the doctrinal predicate — firms with Delaware-incorporated subsidiaries may accelerate adoption of Texas's TBOC § 21.373 mechanism, either through subsidiary-reincorporation or through complete redomiciliation. The SMU CGI Reincorporation Tracker is the canonical dataset for this empirical question.