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Executive Summary
The second Trump Administration has caused a significant shift in regulatory and enforcement priorities impacting issuers' financial reporting, shareholder engagement, and corporate governance around ESG, AI, DEI, and crypto, among other topics. Overarching themes from the Trump Administration include reducing the compliance burdens on doing business as public company, reducing the "woke" agenda of the prior administration, and protecting U.S. economic interests abroad. These themes operate against the backdrop of a significant reduction in the federal government workforce due to action by the Department of Government Efficiency (DOGE), the longest federal government shutdown in history (43 days) in late 2025, and an impending shutdown in 2026.
The Securities & Exchange Commission's (SEC) rulemaking focus is on reducing corporate disclosure requirements, depoliticizing annual shareholder meetings, and simplifying the capital raising process, all to encourage more companies to go public. Significant rule proposals from the SEC are expected in 2026.
The level of federal enforcement activity has been impacted by staffing reductions and the 2025 government shutdown. The SEC is also pursuing a "new day" approach that includes refocusing on protecting retail investors from those who lie, cheat, and steal, ending the "Regulation by Enforcement" approach of the prior administration, and targeting foreign actors taking advantage of U.S. capital markets. The U.S. Department of Justice (DOJ) has significantly curtailed FCPA and other white-collar investigations of U.S. companies, although it has remained active in False Claims Act enforcement, mainly in the healthcare sector. The DOJ has also announced formation of a cross-agency Trade Fraud Task Force to combat tariff evasion and other import violations.
The federal government is actively promoting the AI and crypto industries. Its AI initiative focuses on the U.S. being the global leader in AI and aims to preempt state AI regulation for allegedly stifling innovation and promoting ideological bias. The federal government has undertaken a 180 degree pivot from the prior administration with respect to crypto, both dropping enforcement actions and pursuing legislative and regulatory frameworks to legitimize and promote crypto.
Several states, including California, are pushing back on parts of the federal agenda, including through laws targeting climate change and AI. On another state-related note, the major theme in Delaware has been the reaction by its legislature and judiciary to the challenge by several other states to Delaware's role as the preeminent state for incorporation, or "DExit." Amendments to Sections 144 and 220 of the Delaware General Corporation Law (DGCL") were enacted in 2025, addressing some of the concerns raised by the pro-DExit camp. The Delaware Supreme Court also nullified the result of and reduced the plaintiffs' attorneys' fees payable in some of the high-profile Chancery Court decisions that fueled the DExit movement. For now, at least, Delaware appears to be weathering the storm.
This article describes the above developments in more detail, and outlines some of the related challenges and opportunities that boards of directors and general counsel of public companies (and where relevant private companies) should be aware of for 2026.
Securities Laws and Stockholder Voting
The SEC's Chair, Paul Atkins, has expressed a desire to reverse the significant decline in the number of public companies since its peak in 1997 through reducing disclosure burdens on public companies, de-politicizing shareholder meetings, and eliminating frivolous shareholder litigation.1 Many of the following initiatives can be seen as furthering that goal.
Rule 14a-8
According to the SEC's Regulatory Flexibility Agenda, the Division of Corporation Finance is targeting April 2026 for issuing a rule proposal to amend Exchange Act Rule 14a-8. Chair Atkins has indicated that the SEC will fundamentally reassess the original intent behind Rule 14a-8 and the rule's current purpose. While an adopting release would likely come too late to impact the 2026 proxy season, the two developments described below are not too late to have potential impact.
In a speech in October 2025, Chair Atkins outlined his views in support of excluding precatory (non-binding) shareholder proposals. Under Rule 14a-8(i)(1), shareholder proposals may be excluded if said proposals are not a proper subject for shareholder action under state law. Shareholder proposals that require boards to take action, such as with respect to environmental and social issues, are typically excludable on that basis, so shareholders sidestep the exclusion by making the proposals precatory. A note to Rule 14a-8(i)(1) states the SEC's views that most precatory proposals are proper under state law, and that the SEC will presume they are proper unless the company demonstrates otherwise. Chair Atkins noted in his speech, however, that the issue was unsettled under Delaware law and expressed confidence that the SEC would permit a Delaware corporation to exclude a precatory proposal if the corporation's notice to the SEC was supported by a legal opinion. An alternative approach that appears to be on safer footing under Delaware law, and would accordingly serve as a safer basis for exclusion under Rule 14a-8, would be for the corporation's board to adopt a bylaw that restricts the ability of shareholders to adopt precatory proposals.2 The laws of other states of incorporation may also restrict precatory proposals for corporations domesticated in those states.
On November 17, 2025, the SEC announced that, due to resource constraints following the government shutdown, the Division of Corporation Finance had determined not to respond to no action requests seeking to exclude Rule 14a-8 shareholder proposals, other than those under Rule 14a-8(i)(1).3 The SEC indicated that, if an issuer nonetheless wants some form of response from the SEC, it or its counsel should include, as part of its notification to the Division under Rule 14a-8(j), "an unqualified representation that the company has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decision." The Division will respond with a letter indicating that, based solely on the company's or counsel's representation, the Division will not object to exclusion of the shareholder proposal. Accordingly, the SEC has provided issuers with a broad ability to exclude Rule 14a-8 proposals for the 2026 proxy season. Several issuers have taken the SEC up on its invitation to obtain a letter indicating that the Division will not object to exclusion based solely on the representations of the issuer or its counsel.4 Note that, whether or not issuers wish to obtain such a letter, pursuant to Rule 14a-8(j) they still need to provide the SEC and the proponent notice of an intent to exclude a shareholder proposal at least 80 days prior to filing definitive proxy materials. The SEC has likely preserved its role in reviewing no action requests under Rule 14a-8(i)(1) so that it can develop a new position for precatory proposals, consistent with Chair Atkins' views described above.
Quarterly Reporting
Quarterly reporting, which has been in place in the U.S. since 1970, has been criticized as overly burdensome and promoting short-termism over long-term value creation. In September 2025, Chair Atkins publicly announced that, at the prompting of President Trump, the SEC was fast-tracking a proposal that would permit public companies to file financial statements on a semi-annual basis instead of quarterly. A corresponding rulemaking petition to amend Exchange Act Rules 13a-13 and 15d-13 and the general instructions to Form 10-Q was filed by the Long-Term Stock Exchange with the SEC on September 30, 2025. If semi-annual reporting were to be implemented, then issuers will still have the option of reporting on a quarterly basis in a voluntary manner, including the issuance of regular earnings releases and holding of earnings calls. Possible reasons for continuing to report on a quarterly basis include better coverage by the Street, ease of shareholder engagement, shorter trading blackouts for insiders who rely on the release of material non-public information to create an opportunity for an open window for trading, ease of capital raising, and reduction of Regulation FD issues.
The SEC has not yet issued a rule proposal on this topic. The SEC indicated in its Regulatory Flexibility Agenda that the Division of Corporation Finance is targeting rule proposals to rationalize disclosure practices by April 2026. It is possible that semi-annual reporting may be addressed as part of that initiative.
Mandatory Arbitration Provisions
On September 17, 2025, the SEC published a policy statement announcing that it would no longer refuse to accelerate effectiveness of registration statements on the basis of the issuer having charter or bylaw mandatory arbitration provisions for investor claims arising under federal securities laws.5 This reverses the SEC's unwritten policy to deny such acceleration requests. The prior unwritten policy was based on public policy and investor protection grounds and, in particular, on views that the anti-waiver provisions of the federal securities laws and the right of investors to bring private class actions may override the Federal Arbitration Act's policy favoring arbitration agreements. In its new policy statement, the SEC noted that in the future it will instead focus its review on the adequacy of the registration statement's disclosures, including those relating to mandatory arbitration provisions.
Issuers that wish to adopt mandatory arbitration provisions should ensure that the provisions comply with applicable state law and are accurately described in any registration statement. As noted in the policy statement, Delaware law does not permit mandatory arbitration provisions for stockholder claims.6 Moreover, even where state laws expressly permit or are silent on such provisions, institutional investors, which historically have opposed mandatory arbitration provisions (that typically also include class action waivers), may bring costly and lengthy legal challenges despite the fact that, as Chair Atkins touted, arbitration results in "quicker payments to harmed shareholders and reduced litigation costs."7 While it is not clear how courts will resolve potential challenges and whether issuers will rush to include mandatory arbitration in their governance documents, what is clear is that the current SEC will no longer be a roadblock to their adoption. At least one Texas corporation has adopted mandatory arbitration provisions.8
Proxy Advisory Firms
The proxy advisory firm (PAF) business is under pressure from regulators and at risk of eroding due to institutional investors switching to in-house, proprietary platforms.
On December 11, 2025, the White House issued an executive order (EO) directing the SEC and other agencies to take a broad range of actions aimed at increasing oversight of PAFs and promoting "accountability, transparency, and competition".9 The EO specifically targeted Glass Lewis and ISS, describing them as foreign-owned and controlling more than 90% of the proxy advisor market. The EO directs:
- the SEC Chair to review its relevant rules, guidance, and other materials and consider necessary rescissions as well as take other action such as enforcing anti-fraud provisions with respect to PAF recommendations, assessing whether PAFs should register as registered investment advisers, and assessing implications under Section 13 of the Exchange Act;
- the FTC Chair to make various inquiries of PAF behavior relating to potential violations of antitrust law, or engaging in unfair methods of competition or unfair or deceptive acts or practices; and
- the Secretary of Labor to take steps to revise regulations and guidance relating to the fiduciary status of PAFs in advising with respect to shares held under ERISA plans, and enhancing transparency.
The EO does not specify a timeline for any of these actions. A SEC rulemaking proposal is expected sometime in 2026. Consequently, any final rules are very unlikely to have an impact on the 2026 proxy season.
In June 2025, Texas Governor Greg Abbott signed into law SB2337,10 which targets proxy voting advice on the basis of nonfinancial factors, such as ESG and DEI, and voting recommendations on any shareholder proposal that is inconsistent with management's recommendation if it does not include a written economic analysis of the financial impact on shareholders of the proposal. In either case, the PAF is required to include onerous disclosure to each shareholder receiving its voting recommendation, conspicuously stating that its advice is not provided solely in the financial interest of shareholders and explaining the basis of the advice and that it subordinates the financial interests of shareholders to other objectives. The PAF is also required to disclose on its website that its advice and recommendations are not based solely on the financial interests of shareholders. The law also contains provisions relating to PAFs providing conflicting advice to different clients.
The Texas law applies with respect to voting recommendations on public entities that are incorporated in Texas, have a principal place of business there, or have a company proposal to reincorporate in Texas. The law came into effect by its terms on September 1, 2025. Both ISS and Glass Lewis filed legal actions challenging the law. In September 2025, a preliminary injunction was granted preventing enforcement by the Texas Attorney General of the law against those two PAFs.11
In January 2026, JPMorgan Chase's Asset Management Division announced that it would discontinue using PAFs and would instead use an internal AI-powered platform called Proxy IQ. Later that month, another large asset management firm announced the launch of its own proprietary proxy voting service for client assets.12 While these are the first large asset managers to announce a shift from PAFs to their own platforms, they are unlikely to be the last. Glass Lewis has announced that it is also changing its business model and will use AI to offer clients more customized voting policies based on client voting preferences.
Retail Voting Programs
In September 2025, the SEC issued a no action letter to Exxon Mobil Corporation permitting implementation of a "Retail Voting Program," which is a program to which retail shareholders can sign up to give standing voting instructions to vote their shares in accordance with management's recommendations.13 The program must be available to all retail investors and not to any registered investment advisors exercising voting authority over client securities. Shareholders that opt in must be given annual reminders of their opt-in status and their ability to opt out. Shareholders must also have the ability to override their opt-in instructions with respect to any voting proposal.
Retail Voting Programs are a potentially useful way for public companies with large retail ownership to reduce the costs and burdens of voting and vote solicitation for both the companies and their retail shareholders, for both annual and special meetings. It remains to be seen how many companies will take advantage of these programs, which will come with cost and administrative burden. The SEC has indicated that companies wishing to adopt a similar program should consult with the SEC about the specifics of their proposed programs.
Other SEC Rule Proposals
The SEC's Regulatory Flexibility Agenda also lists the following rulemaking initiatives, among others:14
- Public Company Disclosure: The SEC is undertaking a comprehensive review of Regulation S-K to refocus it on material disclosure requirements. In January 2026, Chair Atkins issued a statement soliciting public comments on amending Regulation S-K (other than Item 402, which is being addressed separately), with a deadline of April 13, 2026.15 Accordingly, a proposing release will likely follow later in the year. Recent speeches by the new Director of the Division of Corporation Finance, Jim Moloney, and Commissioner Uyeda at a prominent securities law conference make clear the SEC is "aiming high" with its proposed revisions to Regulation S-K.
- Foreign private issuers (FPI): In June 2025, the SEC issued a concept release seeking public comments on the FPI definition. No deadline has been given for a proposing release. On March 18, 2026, officers and directors of FPIs will become subject to the reporting obligations under Section 16(a) of the Exchange Act, pursuant to the Holding Foreign Insiders Accountable Act (HFIAA),16 which was signed into law on December 18, 2025. The HFIAA did not subject officers and directors to the short swing profit recapture rules of Section 16(b), or short sale prohibitions of Section 16(c), or subject 10% holders of FPIs to Section 16.
- Rule 144: An initial proposing release was issued in January 2021 to amend aspects of Rule 144 relating to the holding period and filing requirements. A second proposing release, relating to expansion of the scope of the safe harbor, is targeted for April 2026.
- Emerging Growth Company (EGC) Accommodations and Simplification of Filer Status: A proposing release to expand EGC accommodations and simplify filer statuses for reporting companies is targeted for April 2026.
- Shelf registration modernization: A proposed release to modernize the shelf registration process and reduce compliance burdens is targeted for April 2026.
- Exempt Offerings: A proposing release to simplify the pathways for private businesses to raise capital, and increase their access to investors, is targeted for April 2026.
Climate Disclosure Rules
In March 2024, the SEC adopted disclosure rules requiring issuers to make extensive climate-related disclosure, including with respect to scope 1 and scope 2 emissions, climate-related risks and actual or likely impacts, mitigation activities and transition plans, governance and risk management matters, climate-related targets, and costs and expenses associated with severe weather events and other naturals, and carbon offsets and renewable energy credits.
The rules were challenged by several states and industry groups before they became effective. The challenges were consolidated in the U.S. Court of Appeals for the Eight Circuit. The SEC stayed application of the rules pending judicial review. On March 27, 2025, the SEC announced that it would no longer defend the rules. In September 2025, the Eighth Circuit ordered that the litigation would be held in abeyance until the SEC reconsiders its rules or renews its defense of them. Accordingly, the rules are unlikely to take effect during the term of the Trump Administration.
Several states have introduced or adopted climate disclosure bills. California's Climate Corporate Data Accountability Act (SB 253)17 and Climate-Related Financial Risk Act (SB 261)18 were signed into law in October 2023. SB 261 requires a biennial climate-related financial risk report, for posting on covered entity's website, commencing January 1, 2026. SB 253 calls for annual scope 1 and scope 2 emissions disclosure, commencing on a date to be determined in 2026 (not before June 30, 2026), with phase-in for scope 3 emissions disclosure in 2027. Both laws apply to companies doing business in California with annual revenue above a threshold amount. In November 2025, the Ninth Circuit Court of Appeals granted a preliminary injunction halting enforcement of SB 261. Industry challenges to SB 253 are currently pending before the Ninth Circuit, although, as of the time of writing, enforcement of the law has not been enjoined.
Various non-U.S. jurisdictions have adopted, or are considering, similar environmental disclosure laws, including the EU, UK, and Canada. Some of these laws are also being stayed or revisited with a view to narrowing their scope.
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Footnotes
2 See Kyle Pinder, The Non-Binding Bind: Reframing Precatory Stockholder Proposals Under Delaware Law, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5418534. Chair Atkins referenced Kyle Pinder's article approvingly in his speech.
5 https://www.sec.gov/files/rules/policy/33-11389.pdf.
6 See DGCL §115(c).
8 https://news.bloomberglaw.com/esg/biblical-oil-firm-first-to-mandate-arbitration-since-sec-shift.
10 https://capitol.texas.gov/tlodocs/89R/billtext/html/SB02337F.HTM.
11 The injunction does not apply to corporations who are the subject of a voting recommendation by a PAF or the shareholders of such corporations, both of whom are granted the right to bring claims under the law.
14 Certain of these topics are also subject to bills that are working their way through Congress, such as the Incentivizing New Ventures and Economic Strength Through Capital Formation ("INVEST") Act.
15 https://www.sec.gov/newsroom/speeches-statements/atkins-statement-reforming-regulation-s-k-011326.
16 https://www.congress.gov/bill/119th-congress/senate-bill/1089/text.
17 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB253.
18 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB261.
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