DealLawyers.com Blog

The other major news from last week—which has been a bit overshadowed by the proposal to rescind Rule 14a-8—is the SEC’s proposal to modernize the proxy solicitation rules. Among other changes, the proposal would:

– Eliminate the requirement to provide a so-called “glossy” annual report;

– Eliminate the 20-business day deadline when documents are incorporated by reference in a proxy statement;

– Repeal the requirement to file Notices of Exempt Solicitation; and

– Shorten the broker search period from 20 business days to 5.

Many law firm memos have highlighted the practical impact that some of these procedural changes would have on M&A and activism. For example:

– Gibson Dunn suggests companies consider commenting on “whether eliminating the Notice of Exempt Solicitation submission requirement unreasonably reduces a company’s visibility into activist communications.”

– Fenwick and Alston & Bird both stress that the shortened broker search window would improve deal certainty and reduce “empty voting.” From Fenwick:

“The shortened broker search period could affect deal and proxy contest timing [. . .] Companies pursuing mergers or other transactions requiring a shareholder vote, or facing a contested election, have had to build the current 20-business-day period into their record-date planning. Under the proposed rules, that period could shrink to as little as five business days, allowing companies to move toward a vote more quickly and reducing the risk that market volatility, a new bidder, or other external developments arise during the search period. The SEC acknowledges that this could leave dissident shareholders less time to build a position or organize support before the record date, but notes that the current process is non-public, so shortening it may also reduce an existing informational advantage some dissidents hold over investors—’so a cost to dissident shareholders may also represent a benefit to other market participants.

The shorter broker search period could also affect share lending tied to voting. A narrower window could reduce opportunities for “empty voting” (voting borrowed shares without a corresponding economic interest), but the SEC notes that it could equally leave institutional holders less time to recall loaned shares in order to vote them. Companies and institutional investors may want to consider both effects if the rule is adopted.”

– Alston & Bird notes that the SEC also proposed eliminating the 20-business-day requirements in Forms S-4 and F-4.

– Cooley notes that, since Corp Fin’s January 2026 guidance prohibiting voluntary Notices of Exempt Solicitation, “market participants have already turned increasingly to press releases, other media and third-party platforms to publicize campaigns – all still subject to the proxy rules’ antifraud provisions. If the notice requirement is eliminated entirely, companies will need to monitor these channels with greater frequency rather than principally relying on EDGAR to learn they are the target of an exempt solicitation.”

– Meredith Ervine