Securities Snapshot: 3rd Quarter 2026

SEC Moves to End Shareholder Proposal Rule, Modernize Proxy Solicitation, and Update Accredited Investor Status

The third quarter of 2026 saw the SEC continue building on this year’s regulatory renovation—putting a finishing coat on earlier reforms and sketching bold new additions to the blueprint. The Commission formally proposed to rescind Rule 14a-8’s shareholder proposal framework and recalibrate discretionary proxy authority under Rule 14a-4, proposed a companion set of amendments to modernize the proxy solicitation process, and began exploring an alternative pathway to accredited investor status through a knowledge-based exam. At the same time, it proposed Regulation E-Delivery to make electronic delivery the default for investor communications, the Division of Corporation Finance issued new interpretive guidance clarifying Schedule 13G eligibility for institutional investors, and the SEC expanded exemptive relief for abbreviated tender offer periods for non-convertible debt. In addition, the SEC joined forces with the FDA, entering into a Memorandum of Understanding to formalize cross-agency information sharing for public companies in the life sciences sector. In this Snapshot, we examine each of these updates from the last quarter in turn:

Proposed Rescission of Rule 14a-8 and Amendments to Rule 14a-4

Coming on the heels of the SEC’s August 14, 2026 announcement that the agency would no longer respond to Exchange Act Rule 14a-8 no-action requests, the SEC on September 16, 2026 formally proposed to rescind in its entirety Rule 14a-8, which has for decades enabled eligible shareholders to include proposals in a company’s proxy materials. 

In the proposing release, the SEC described Rule 14a-8 as “exceed[ing] the scope of the Commission’s statutory authority” and “intrud[ing] into matters of state law.” The SEC also pointed to independent policy reasons for doing away with the rule, noting that many of the original justifications for adopting the rule either have not been substantiated in practice or are less compelling today, and that the rule discourages states from developing their own laws governing shareholder proposals.

If adopted, issuers would no longer be required under the federal securities laws to include shareholder proposals in their proxy materials. Instead, shareholder proposal rights would depend on state corporate law or a particular company’s governing documents—creating a patchwork of rules that differ by state and by company. Because some bylaws may be silent on the matter and state laws generally permit, but do not require, companies to address shareholder proposals, issuers’ boards and management teams should evaluate their governing documents and assess how the recission would affect their annual meeting preparation and corporate governance strategy.

As part of the same release, the Commission also proposed amendments to Exchange Act Rule 14a-4(c), which governs when a company may use discretionary voting authority over items raised at a shareholder meeting but not included in the company’s proxy statement. Currently, Rule 14a-4(c) limits issuers’ discretionary voting authority on an omitted proposal if the shareholder proponent conducts its own solicitation, distributes its own proxy materials to holders of at least the percentage of voting shares needed under applicable law to carry the proposal, and satisfies other procedural requirements. The proposed amendments would expand the circumstances under which an issuer could exercise its discretionary voting authority over proposals presented at a shareholder meeting but not included on its proxy card, while also allowing shareholders to withhold such authority for their own shares. SEC Chairman Paul Atkins characterized the Rule 14a-4 amendments as independent of the proposed Rule 14a-8 rescission, but acknowledged that if the Commission does rescind Rule 14a-8, shareholders may be more likely to file their own proxy materials to solicit votes for their proposals, making the recalibration of discretionary proxy authority particularly timely.

Taken together with the SEC’s earlier discontinuation of no-action responses, these proposals represent a significant effort to retool the agency’s role in the shareholder proposal process. Although each proposal is subject to a 60-day public comment period and may change before being adopted, public companies should begin evaluating how the potential rescission of Rule 14a-8, the amendments to Rule 14a-4(c), and the absence of the no-action process could affect their proxy season planning, charter and bylaw provisions, and shareholder engagement strategies going forward.

Proposed Proxy Solicitation Modernization

In a separate proposing release also issued on September 16, 2026, the SEC announced several proposed rule amendments designed to modernize the proxy solicitation process and align it with technological advancements and contemporary shareholder communication practices. Chairman Atkins framed this companion release as reflecting his broader aim to reshape the Commission’s rules in line with “developments in market practice and technology.”

The proposed amendments would:

• Eliminate the Annual Report to Security Holders (ARS) Delivery Requirement: Currently, Exchange Act Rule 14a-3 requires companies to furnish shareholders with an annual report either together with or prior to the issuance of a proxy statement for a meeting at which directors will be elected. The amendment would remove the ARS obligation for companies that have already filed a Form 10-K for the most recent fiscal year, as the disclosures contained in the ARS are generally duplicative of the information in the Form 10-K;
• Eliminate the Delivery Deadline for Proxy Statements that Incorporate Information by Reference: The proposal would do away with the requirement to deliver a proxy statement that incorporates documents by reference at least 20 business days prior to the shareholder meeting, given the availability of such incorporated documents on EDGAR;
• Remove the Requirement and Ability to Submit Notices of Exempt Solicitation: Under current Exchange Act Rule 14a-6(g), certain large shareholders must submit a Notice of Exempt Solicitation on EDGAR for certain written exempt solicitations. The proposal would eliminate these notices altogether, including both mandatory and voluntary filings; and
• Shorten the Minimum Broker Search Period: The proposed amendment would shorten the minimum broker search period under Exchange Act Rule 14a-13 from 20 business days before the record date of the shareholder meeting to 5 business days.

Like the Rule 14a-8 and 14a-4(c) proposals, the public comment period for the proxy solicitation modernization proposal will remain open for 60 days following publication in the Federal Register. In the meantime, companies should consider the potential impact of these proposed changes on proxy statement preparation timelines, shareholder meeting logistics, and investor communication processes, particularly the elimination of the separate annual report requirement and the shortened broker search window.

Possible Changes to Accredited Investor Status

Following the SEC’s 45^th annual Small Business Summit, the agency in late July issued a report on the Summit, in which it identified potential changes to who may qualify as an accredited investor.

Chairman Atkins has directed the staff of the SEC’s Division of Corporation Finance to begin discussions with the Financial Industry Regulatory Authority (“FINRA”) about the possibility of creating an accredited investor examination that would allow retail investors to qualify through demonstrated financial sophistication rather than meeting the monetary thresholds alone. Potential exam frameworks discussed include tests covering economic fundamentals, law, ethics, and regulation, similar to the Series 7 or Series 82 exams.

The existing parameters for an individual to be deemed an “accredited investor” are chiefly geared toward wealth—namely, a net worth exceeding $1 million (excluding the value of a primary residence) and annual income above $200,000, or $300,000 for married couples. Because these thresholds have not been updated since 1982, yearly inflation has enlarged the pool of qualifying individuals, many of whom do not possess any corresponding investment sophistication.

The prospect of revisiting the accredited investor standard has long been floated, but the movement appears to be gaining traction; indeed, Kenneth Bentsen, Jr., the president of the Securities Industry and Financial Markets Association, testified before the U.S. Senate Banking Committee on August 6, 2026 in support of the creation of such a test. Bentsen argued the current approach “unfairly limits Americans’ participation in capital markets” by excluding individuals without the requisite net worth but who otherwise have the professional experience or financial acumen necessary to qualify as an accredited investor.

Whether an investor test is ultimately implemented remains to be seen; however, private companies and fund sponsors that routinely rely on Regulation D’s exempt offering framework should monitor these developments closely, as an expanded accredited investor pool could meaningfully broaden the market for private placements.

SEC’s Proposed Regulation E-Delivery

On July 16, 2026, the SEC proposed Regulation E-Delivery, a comprehensive new rule that would make electronic delivery the default method for satisfying delivery obligations to investors, clients, and other recipients under the federal securities laws.

Currently, issuers generally must deliver regulatory information in a paper format unless the recipient affirmatively elects otherwise. If adopted, Regulation E-Delivery would effectively reverse this dynamic—establishing electronic delivery of disclosures and reports as the default, unless and until the recipient chooses to opt out. Issuers, broker-dealers, investment advisers, and transfer agents would be permitted to deliver required materials electronically without first obtaining investor consent, provided the investor has supplied an electronic address, has received prominent disclosure about e-delivery, and has not opted out. Investors would retain the right to receive paper copies free of charge and could opt out at any time. Chairman Atkins stated that “a default to paper delivery should be a relic, not a standard.”

The proposal introduces two permissible delivery methods: (1) direct delivery (sending the document directly to an electronic address) and (2) statement of availability (sending an electronic notice with a hyperlink to the document). For materials containing personal financial information, however, direct delivery would not be permitted; only the statement of availability method with appropriate safeguarding processes could be used.

Proposed Regulation E-Delivery would also significantly impact issuers’ compliance with Regulation 14A, which allows companies to satisfy proxy delivery obligations by either mailing a “full set” of proxy materials or using the “Notice of Internet Availability” model, under which shareholders receive a paper notice directing them to electronically available proxy materials. If adopted, new Regulation E-Delivery would eliminate the paper Notice of Internet Availability delivery method, and with it, the corresponding requirement under Rule 14a-16 that such notice be sent at least 40 days prior to the annual meeting. Regulation E-Delivery would likewise extend electronic delivery to business combination proxy solicitations that historically required full paper delivery.

The proposal also describes a transition process for recipients receiving paper deliveries when the rule becomes effective. Covered entities would be required to provide such recipients with two paper notices prior to defaulting to e-delivery—an initial notice at least 180 days before the transition and another, follow-up notice 30 days before the switch.

The public comment period for Regulation E-Delivery closed September 19, 2026. If adopted, the rule would take effect 60 days after adoption and be followed by a two-year transition period, after which the SEC’s current e-delivery interpretive guidance would be rescinded and covered entities would be obligated to comply with the new framework. In the interim, issuers should begin evaluating their current delivery processes and investor communication infrastructure in anticipation of the shift to default electronic delivery.

Updated Guidance Regarding Schedule 13G Eligibility

On September 2, 2026, the staff of the SEC’s Division of Corporation Finance issued three new Corporate Finance Interpretations (CFIs) addressing communications by shareholders who report beneficial ownership on Schedule 13G. The new CFIs clarify that certain common shareholder engagements will not, by themselves, disqualify a filer from continued reporting on Schedule 13G. These follow the February 2025 CFI 103.12, which had described engagements that might compromise Schedule 13G eligibility and had a reported chilling effect on institutional investor engagement with issuers’ management.

The new interpretations are as follows:

• CFI 103.13 addresses issuer-initiated meetings: if an issuer requests a meeting with a shareholder to discuss the shareholder’s views on matters subject to a vote, or to understand past voting decisions, that participation would not, by itself, disqualify the shareholder from Schedule 13G.
• CFI 103.14 confirms a shareholder may discuss its views and how those views inform voting decisions with a person engaged in a proxy solicitation without losing eligibility.
• CFI 103.15 states a shareholder may seek clarification from an issuer about particular facts or statements in the issuer’s SEC filings without losing Schedule 13G eligibility.

The new CFIs distinguish between exchanging information or explaining voting views, which is permitted, and pressuring an issuer to adopt particular measures, which is not. Institutional investors should welcome the added comfort for routine engagement, which should help ease the purported chilling effect of the prior guidance.

Tender Offer 5-Day Exemptive Relief

On June 30, 2026, the SEC’s Division of Corporation Finance issued a new exemptive order expanding the availability of abbreviated tender offer periods for non-convertible debt securities to remain open for as few as 5 business days, rather than the 20 business days generally required by Rule 14e-1(a).

The order supersedes the Division’s 2015 no-action letter and is a formal exemptive order issued under delegated SEC authority rather than informal no-action relief. The order applies to issuers, their wholly owned subsidiaries, or parent companies owning 100% of the issuer’s stock. Consideration may consist of cash, Qualified Debt Securities, or both, and exchange offers are limited to QIBs, non-U.S. persons, and institutional accredited investors.

Key changes from the 2015 no-action letter include:

• Partial (less-than-all) offers are now permitted with pro rata acceptance;
• Concurrent consent solicitations are permitted if the amendment requires only simple majority approval;
• The guaranteed delivery procedure requirement is eliminated;
• Financing restrictions are removed;
• An expanded definition of Qualified Debt Securities; and
• Updating the benchmark formulation by referring to SOFR instead of LIBOR.

Combined with the April 2026 exemptive order permitting 10-business-day equity tender offers, the SEC continues to modernize and streamline the tender offer framework. Issuers should evaluate whether the expanded exemptive relief may be leveraged in connection with upcoming liability management transactions and should work with counsel to confirm eligibility under the new order’s conditions.

SEC and FDA Announce MOU to Bolster Cooperation and Ensure Market Integrity

On August 31, 2026, the SEC and the U.S. Food and Drug Administration (FDA) announced a Memorandum of Understanding (MOU) establishing a formal framework for sharing nonpublic information between the two agencies. Under the MOU, each agency commits to sharing information related to FDA-regulated products and activities—including pharmaceuticals, biotechnology, medical devices, food and cosmetics, and tobacco—as well as the companies that make, distribute, and sell them. The MOU takes effect immediately and remains in force for three years, subject to extension or modification by mutual written consent.

The MOU further provides that each agency will designate at least one primary point of contact to ensure the MOU is appropriately upheld. Notably, the SEC will maintain contacts in both its Division of Enforcement and its Division of Corporation Finance, while the FDA will maintain a contact in its Office of the Chief Counsel. This dual-track structure signals that the MOU will be used for both disclosure review and active enforcement investigations.

For publicly traded life sciences companies, the practical implications are significant. The MOU is designed to help each agency detect situations where a company may have made false or misleading statements to investors about matters within the FDA’s regulatory purview—such as the status of FDA product approvals, clinical trial results, manufacturing compliance, or distribution and marketing activities. Issuers routinely characterize FDA interactions in press releases, investor presentations, earnings calls, and Exchange Act filings, using phrases like FDA was “supportive” of a particular development or noting the company is “on track” for submission or FDA approval. The MOU reminds companies to pay close attention to these characterizations, noting the underlying regulatory record, including FDA meeting minutes, correspondence, and review comments, may now more readily surface in an SEC disclosure review or enforcement investigation. One of the FDA’s initial points of contact under the MOU is the Associate Commissioner for Inspections and Investigations, suggesting that information sharing could also extend to facility inspections, Form 483 observations, Warning Letters, recalls, and other compliance matters.

Importantly, the MOU does not create new substantive enforcement authority or change what public companies are legally required to disclose. Still, companies in the life sciences, pharmaceutical, and medical device sectors should engage counsel in a careful review of any public description of significant FDA interactions to ensure such interactions are captured accurately.

Should you have any questions or need assistance, please contact us.

F. Mark Reuter
513.579.6469
freuter@kmklaw.com

Allison A. Westfall
513.579.6987
awestfall@kmklaw.com

Olivia M. King
513.579.6988
oking@kmklaw.com

Christopher T. Colloton
513.579.6959
ccolloton@kmklaw.com