McGuireWoods Quarterly Securities & Capital Markets Update

Welcome to the McGuireWoods Quarterly Securities & Capital Markets Update, a series of updates that reviews important securities law developments from the previous quarter and alerts readers of significant considerations for the upcoming reporting period.

This edition provides updates on developments during the first quarter of 2026 and considerations for calendar year-end registrants regarding their upcoming Q1 Quarterly Reports on Form 10-Q, proxy statements and annual meetings of shareholders, the second quarter reporting period and other topics. This alert covers the following topics:

Rule 14a-8 shareholder proposal exclusion litigation;
dual listings on Nasdaq Texas or NYSE Texas;
shortened broker search requirement under Rule 14a-13;
enforcement of inline XBRL data requirements on filing fee exhibits;
relief for at-the-market (ATM) offerings by issuers subject to baby shelf limitations;
application of Section 16(a) reporting requirements to foreign private issuers;
potential updates to insider trading policies to address prediction market restrictions; and
new risk factors to consider for Form 10-Q.

Rule 14a-8 Shareholder Proposal Exclusion Litigation

In November 2025, the SEC Division of Corporation Finance (Division) announced that it would no longer provide substantive responses to most no-action requests under Rule 14a-8 of the Exchange Act of 1934, as amended, which governs the inclusion and exclusion of shareholder proposals in public company proxy materials. Under the prior framework, public companies seeking to exclude a shareholder proposal typically submitted a no-action request to the SEC, and the Division would provide an analysis indicating whether or not it would object to the exclusion.

Under the revised process, companies need only provide an “unqualified representation” that they have a “reasonable basis” to exclude the proposal, in which case the Division will issue a brief “no-objection” response without substantive review. This new approach, which applies to all no-action requests between Oct. 1, 2025, and Sept. 30, 2026, other than no-action requests pursuant to Rule 14a-8(i)(1) (improper under state law), effectively transfers the responsibility for evaluating the propriety of exclusion decisions from the SEC to companies and, increasingly, to the courts.

The consequences of this policy shift have materialized rapidly. In February and March 2026, shareholders filed at least five federal lawsuits challenging the exclusion of their proposals from company proxy materials. Among these, New York City Employees’ Retirement System v. AT&T Inc. challenged the exclusion of a workforce diversity disclosure proposal on ordinary business grounds, and AT&T reached a settlement approximately a week after the complaint was filed by agreeing to include the proposal. Similarly, Nathan Cummings Foundation, Inc. v. Axon Enterprise, Inc. challenged the exclusion of a potential spending disclosure proposal, and Axon Enterprise settled by agreeing to enhanced political spending disclosures over a five-year period.

Beyond these suits against individual companies, two large shareholder advocacy groups, the Interfaith Center on Corporate Responsibility and As You Sow have taken the additional step of suing the SEC itself. On March 19, 2026, the organizations filed a lawsuit in the U.S. District Court for the District of Columbia, alleging that the SEC’s revised no-action policy violates the Administrative Procedure Act (APA). The complaint contends that the new policy is a “legislative rule” that alters proponents’ legal rights and the Division staff’s obligations, yet it was adopted without the notice-and-comment rulemaking procedures required by the APA. The plaintiffs further allege that the policy is “arbitrary and capricious” and “inconsistent with the burden of persuasion established by Rule 14a-8,” which requires companies to carry the burden of demonstrating that a proposal may be properly excluded. The suit seeks to have the revised policy declared unlawful and vacated or permanently enjoined.

This emerging wave of litigation raises significant open questions, including whether companies will continue to exclude shareholder proposals pursuant to the SEC’s “reasonable basis” criteria and whether the APA challenge will succeed in restoring the prior substantive review framework. Public companies considering excluding shareholder proposals this proxy season should carefully weigh the heightened litigation risk and prepare detailed, company-specific analyses to support their exclusion decisions, as proponents with institutional resources have demonstrated a clear willingness to pursue judicial remedies in the absence of SEC oversight.

Dual Listings on Nasdaq Texas or NYSE Texas

“Dual listing” refers to a company maintaining its primary listing on one national securities exchange (e.g., NYSE or Nasdaq) while obtaining a secondary listing on a Texas-based exchange, with the stock continuing to trade under the same ticker on both venues. Unlike traditional cross-border dual listings designed to access geographically distinct investor pools, domestic dual listing on a Texas exchange does not fundamentally alter trading mechanics.

Dual listing requires filing a Form 8-A12B Registration Statement with the SEC under Section 12(b) of the Exchange Act. This filing is relatively straightforward and typically incorporates by reference the securities description from the company’s most recent Annual Report on Form 10-K.

Two stock exchanges have commenced operations in Texas: NYSE Texas and Nasdaq Texas. Each offers “dual listing” capabilities, allowing companies already listed on a major national exchange to obtain a secondary listing on a Texas-based exchange. Dual listing is currently available at little to no incremental cost or regulatory burden, and dozens of major public companies, including AT&T, Halliburton, Vistra Corp. and Huntington Bancshares Inc., have already dual-listed on the NYSE Texas or Nasdaq Texas.

NYSE Texas launched in February 2025 when Intercontinental Exchange rebranded its NYSE Chicago exchange and relocated its operations to Dallas. Nasdaq Texas launched on March 5, 2026, after Nasdaq reincorporated its existing Nasdaq BX exchange in Texas. It is headquartered at Nasdaq’s new Dallas regional office.

Dual listing on a Texas-based exchange may offer several strategic advantages:

Texas Market Alignment and Branding. A dual listing signals commitment to the Texas business ecosystem, appealing to companies with significant operations or investor constituencies in the state.
Low Cost and Minimal Burden. Companies already listed on NYSE or Nasdaq incur little to no additional fees or regulatory obligations for dual listing on the corresponding Texas exchange.
Regional Visibility. A dual listing can enhance a company’s profile among Texas-based and regional investors.
Pro-Business Environment. Texas’s business-friendly regulatory framework and multiple competing exchanges may drive innovation and competitive pricing in listing services.

Some considerations and risks include:

Limited Near-Term Trading Impact. A dual listing may not meaningfully alter trading volume or liquidity in the near term, given electronic order routing across venues.
Evolving Regulatory Landscape. Companies should monitor potential divergence in listing standards and governance requirements as these exchanges expand.
Texas Corporate Law Developments. Texas has enacted legislation (e.g., Senate Bill 1057) allowing nationally listed companies headquartered in Texas or listed on a Texas exchange to impose significantly higher thresholds on shareholder proposals. Boards should evaluate consistency with existing governance commitments and investor expectations.

Companies and boards of directors considering a Texas dual listing should consider the following action items:

Assess whether a dual listing aligns with the company’s investor relations strategy, geographic footprint and growth plans.
Incremental cost and regulatory burden appear minimal, but companies should confirm the applicable fee structure and ongoing obligations.
Boards should assess whether dual listing implicates Texas state-law governance provisions (e.g., shareholder proposal thresholds) and evaluate consistency with existing commitments and proxy advisory expectations.
Companies electing to dual list will need to execute a Listing Agreement and Listing Application with the relevant exchange and file a Form 8-A12B Registration Statement with the SEC and coordinate timing with the relevant exchange.

Shortened Broker Search Requirement under Rule 14a-13

The SEC relaxed its interpretation of Rule 14a-13(a)(3) of the Exchange Act via CFI Question 133.02 published Jan. 23, 2026. The SEC stated that it “will not object if a registrant conducts its ‘broker search’ less than 20 business days before the record date, provided that the registrant reasonably believes that its proxy materials will be timely disseminated to beneficial owners and otherwise complies with Rule 14a-13,” thus providing public companies with greater flexibility in conducting broker searches before their shareholder meetings. “Broker searches,” wherein brokers, banks and other nominees determine how many copies of proxy materials to distribute to the beneficial owners of a company’s shares, typically take considerably fewer than 20 business days due to technology, and thus the SEC’s update is a welcome change to a rather antiquated reading of Rule 14a-13(a)(3).

The SEC’s deviation from its formerly stringent “20 business day” interpretation has several practical implications. It provides companies with more flexibility in scheduling shareholder meetings and allows companies to move with more speed when necessary, such as in the case of fast-paced M&A transactions, defending against hostile takeovers or reducing exposure to market risk by allowing transactions with a requisite shareholder vote to close more quickly. Additionally, this added flexibility assists companies navigating compressed proxy seasons and allows synchronizing proxy mailings with earnings releases or other investor communications.

Despite this newfound flexibility, companies should proceed with care. The obligation to ensure timely dissemination of proxy materials to beneficial owners under Rule 14a-13(a)(3) remains fully intact, and companies that shorten their timelines and miss delivery windows will still face consequences for noncompliance.

Enforcement of Inline XBRL Data Requirements on Filing Fee Exhibits

On Feb. 6, 2026, the SEC announced that, beginning March 16, 2026, the SEC’s EDGAR system will begin rejecting submissions that lack properly formatted or accurate structured data in their filing fee exhibits, rather than permitting those filings to proceed with only a cautionary notice. This step follows the multiyear implementation timeline set forth in the SEC’s 2021 overhaul of filing fee disclosure and payment procedures (Release No. 33-10997, adopted Oct. 13, 2021), which envisioned an eventual shift from advisory notices to mandatory compliance enforcement. Although the system may still issue warnings in some instances, deficiencies such as absent tags, erroneous calculations or other Inline XBRL formatting problems in fee exhibits will now trigger an outright suspension, preventing EDGAR from accepting the filing until the filer resolves those issues.

This change has important practical implications for companies engaged in capital markets transactions and other SEC filings. A filing suspension could delay the effectiveness of a registration statement, the launch of an offering or the timely completion of other fee-bearing filings. Filers should take immediate steps to ensure their filing fee exhibits are properly structured and tagged before submission. The SEC has pointed filers toward a number of reference materials — such as the EDGAR Filer Manual, the XBRL Guide, the EDGAR Filing Fee Interface Courtesy Guide and its “How Do I” walkthrough for preparing Inline XBRL fee exhibits — to assist in meeting these requirements. The SEC’s web-based Fee Exhibit Preparation Tool, which auto-generates tagged fee exhibits and validates the data within them, is another resource that filers may wish to use proactively.

Given the heightened consequences for filing fee exhibit errors, companies should thoroughly review their fee-calculation tables and accompanying exhibits well before submitting a filing, coordinating closely with third-party filing agents to confirm that each required taxonomy element is accurately applied. Running test submissions through EDGAR with ample lead time ahead of any deadline is advisable, as doing so will surface tagging deficiencies that can be remedied before the actual filing is made. Companies should treat this change as a prompt to strengthen internal processes around structured data compliance to avoid any delays in time-sensitive transactions.

Relief for ATM Offerings by Issuers Subject to Baby Shelf Limitations

The SEC provided meaningful relief for companies conducting ATM offerings that become subject to General Instruction I.B.6 of Form S-3 (baby shelf rule) after launching an ATM program via CFI Question 116.26 published March 19, 2026. The SEC indicated that it would not object if a company that becomes subject to the baby shelf rule as a result of filing its Annual Report on Form 10-K continues offering and selling the full amount of securities registered under its ATM program, so long as the company has (1) entered into a sales agreement (sometimes referred to as an equity distribution agreement) with a designated selling agent, (2) filed a prospectus supplement while it is not subject to the baby shelf rule and (3) registered an ATM program for an amount that the company reasonably expected to offer and sell. This CFI has important implications for companies contemplating an ATM program, particularly those experiencing volatility in their stock price.

Under the baby shelf rule, a company with a public float (calculated based on the market value of the voting and nonvoting common equity held by non-affiliates) below $75 million may only use Form S-3 for primary offerings if certain conditions are met. One such condition is that the company may not offer and sell more than one-third of its public float in any rolling 12-month period. Whether or not a company is subject to the baby shelf rule is determined by measuring its public float during the 60-day period preceding the initial filing of its shelf registration statement and is re-evaluated each time the company files an amendment or updates the shelf registration statement in accordance with Section 10(a)(3) of the Securities Act by filing its Form 10-K.

Prior to the publication of CFI Question 116.26, a company that established its ATM program when its public float was above the $75 million threshold, but whose public float was below the $75 million threshold when filing its Form 10-K, would curtail offerings under its ATM program to avoid violating the baby shelf rule. Now, not only is the SEC providing relief for those companies that established an ATM program in good faith, but it is also enabling companies that are concerned about the volatility of their stock price to lock in their ATM capacity before becoming subject to the baby shelf rule.

Before launching an ATM program, companies should consider the limitations and risks of relying on this new SEC guidance, which are discussed in a separate McGuireWoods alert here.

Application of Section 16(a) Reporting Requirements to Foreign Private Issuers

On Feb. 27, 2026, the SEC adopted a final rule (Release No. 34-104903) implementing the Holding Foreign Insiders Accountable Act (HFIAA), which extends the beneficial ownership reporting requirements under Section 16(a) of the Exchange Act to directors and officers of foreign private issuers (FPIs) with a class of equity securities registered under Section 12 of the Exchange Act. This rule eliminates the historical exemption for FPI insiders from Section 16(a) reporting but preserves exemptions for FPIs from Sections 16(b) and 16(c) of the Exchange Act, relating to short-swing profit disgorgement and short-sale prohibitions, respectively. Under the rule, beneficial owners of 10% or more of the FPI’s equity securities remain exempt from Section 16 entirely, unless they are directors or officers of the FPI, in which case they are subject to the reporting requirements of Section 16(a).

Under the new rule, as of March 18, 2026, FPI directors and officers are required to report their ownership of and trades in the FPI’s equity securities. Under this new rule, FPI directors and officers must file Forms 3, 4 and 5 on EDGAR within the same deadlines as insiders of U.S. domestic issuers:

Form 3, an initial statement of beneficial ownership, is due within 10 calendar days of becoming a director or officer;
Form 4, reporting any changes in beneficial ownership, is due within two business days of any reportable transaction; and
Form 5, for any transactions not otherwise required to be reported earlier or that were eligible for deferred reporting, is due within 45 days after fiscal year-end.

In addition to the revisions to the reporting requirements, the rule also includes certain technical updates to Forms 3, 4 and 5 to accommodate foreign addresses and to allow an optional foreign trading symbol, useful for dual-listed FPIs.

The HFIAA authorizes the SEC to grant exemptions from Section 16(a) reporting requirements where foreign law imposes “substantially similar” reporting requirements. While the rule itself does not create any such exemptions, the SEC issued an order on March 5, 2026 (Release No. 34-104931), conditionally exempting directors and officers of FPIs that are (i) incorporated or organized in a “qualifying jurisdiction” and (ii) subject to a “qualifying regulation.” The order identifies six “qualifying jurisdictions” — Canada, Chile, the European Economic Area, the Republic of Korea, Switzerland and the United Kingdom — and the corresponding “qualifying regulations.” ^[1] The exemption is subject to two conditions:

Directors and officers seeking to rely on the exemption are required to report their transactions in the FPI’s equity securities under the qualifying regulation to which they are subject.
Reports filed pursuant to a qualifying regulation must be available in English to the general public no more than two business days after they are posted.

Directors and officers who fail to satisfy either of these conditions (for example, if they are not required to report a transaction under the applicable qualifying regulation) remain subject to the Section 16(a) reporting requirements. If the applicable regulator’s public database does not permit the filing of an English version of the report, the second condition may be satisfied by posting the report in English on the FPI’s website.

To file reports, directors and officers must have access to EDGAR, which requires the submission of a Form ID to receive filing codes. In light of delays in processing increased numbers of Form IDs, on March 9 and 12, 2026, the SEC issued FAQ guidance clarifying that the Division of Corporate Finance would not recommend enforcement action against directors and officers of FPIs for the untimely filing of Section 16(a) reports if such untimely filing is the result of a delayed Form ID approval. This effectively extends the compliance deadline for those directors and officers who submitted completed Form IDs by March 18, 2026. Affected directors and officers must have filed any required Section 16(a) reports no later than April 1, 2026.

Additionally, on March 13, 2026, the SEC issued a No Action Letter granting temporary relief from the new Section 16(a) reporting requirements for directors and officers of FPIs organized and headquartered in Israel and other countries directly affected by the ongoing conflict in Iran. Under the No Action guidance, these directors and officers will not be subject to enforcement action for failing to satisfy Section 16(a) reporting requirements until April 20, 2026, provided that the conflict materially impaired their ability to meet the original March 18, 2026, deadline.

Given the complexity of these new requirements and the tight compliance timelines, early preparation is essential. FPIs should review their practices and policies to avoid missed deadlines and process gaps once trading or equity awards trigger Form 4 reporting. Steps to consider include:

Identifying all covered insiders under Section 16(a) and mapping each insider’s beneficial ownership in all classes of the FPI’s Section 12-listed equity securities.
If not already done, obtaining EDGAR credentials for each reporting person, setting up filing profiles, and establishing and executing powers of attorney and broker authorizations to enable timely filings.
Developing appropriate internal processes to capture, review and report transactions within two business days and updating insider trading policies, pre‑clearance procedures and equity award administration to promptly identify reportable events.
For FPIs relying on the order’s exemptions, confirming that each insider is subject to, and reporting under, the applicable qualifying regulation and that English-language reports are made publicly available on a timely basis consistent with the order’s conditions.
Coordinating with brokers and planning for cross-border nuances, including dual-listed trading symbols and time zone impacts, and training directors and officers on the new obligations and personal liability risk for late filings.

The HFIAA and this new rule extend beneficial ownership reporting to directors and officers of FPIs, with limited conditional exemptions. FPIs should ensure that they have the appropriate procedures and policies in place to timely address these new reporting obligations.

Potential Updates to Insider Trading Policies to Address Prediction Market Restrictions

The Rise of Prediction Markets

The rapid growth of prediction markets — platforms that allow participants to buy and sell contracts tied to the outcome of real-world events — has introduced a new dimension to insider trading compliance. Platforms such as Kalshi and Polymarket allow users to enter into contracts linked to corporate events, including mergers and acquisitions, earnings results, regulatory approvals and executive leadership changes. For instance, a contract might pay out based on whether a pharmaceutical company receives FDA approval for a particular drug. As these markets gain mainstream traction, companies should consider whether their existing insider trading policies adequately address the risks they present.

Insider Trading Risks in Prediction Markets and Regulatory Scrutiny

For individuals who possess material nonpublic information (MNPI) about corporate events, the opportunity to monetize that knowledge through prediction market activity, rather than through conventional securities trading, may be significant. Although most prediction market contracts may fall outside the SEC’s anti-fraud rules governing securities, these contracts are not beyond regulators’ reach. The Commodity Futures Trading Commission (CFTC), which exercises regulatory oversight over certain prediction market platforms, has signaled that it will actively police manipulative conduct in these markets. Similar to the SEC, the CFTC also has an antifraud provision broadly prohibiting the use or attempted use of “any manipulative or deceptive device or contrivance.” Recently, the CFTC announced the creation of a new task force focused in part on policing misconduct in prediction markets. The DOJ also may use the federal wire fraud statute as an enforcement tool against abuse of insider information in prediction markets, as it previously did to prosecute similar schemes in sports gambling. Beyond government regulators, prediction markets themselves have started instituting new guardrails to prevent insider trading. For example, Kalshi announced that it has implemented preemptive politician screening as well as whistleblower functionality.

Practical Steps for Companies

Against this backdrop, companies should consider taking steps to reduce the legal and reputational risks associated with insider trading in prediction markets.

Broaden Insider Trading Policies. One way to potentially address the risks of insider trading in prediction markets is through insider trading policies. Companies should review their insider trading policies and, when appropriate, revise them to expressly reference prediction markets and event-based contracts. Many existing insider trading policies were drafted before the emergence of these platforms and may define prohibited conduct by reference to “securities,” “stocks” or “options” without capturing the full range of instruments through which MNPI can be exploited. Broadening the scope of covered transactions to include contracts or positions on prediction market platforms helps solve this gap. Companies should also consider whether to explicitly include prediction market restrictions in their codes of conduct.
Enhance Pre-Clearance Procedures. Many companies already incorporate pre-clearance procedures in their insider trading policies. Companies should ensure that their pre-clearance procedures, if any, extend to prediction market transactions. Requiring insiders to obtain approval before placing trades on these platforms provides an additional checkpoint and ensures that compliance personnel have visibility into activity that might otherwise go unmonitored.
Update Training Materials. Beyond insider trading policy revisions, companies should update training and education material to alert directors, officers and other covered persons to the risks associated with insider trading on prediction markets.

Regulators have increasingly expressed concern about prediction market platforms promoting information-based misconduct. Recently, Congress introduced bipartisan legislation to prohibit members of Congress and others in the executive branch from trading in certain prediction markets. Likewise, companies should consider revising and enhancing their internal policing for potential abuse of MNPI on prediction markets. Proactive policy updates now can help mitigate legal and reputational risks, while also demonstrating a commitment to robust compliance in an area of growing regulatory focus.

New Risk Factors to Consider for Form 10-Q

As companies prepare Q1 Form 10-Q filings, now is the time to take a fresh look at risk factors to determine whether updates are warranted or new risk factors should be added.

Risk factors should highlight the material factors that make an investment in a company speculative or risky and should be tailored to a company’s specific facts and circumstances, avoiding boilerplate language and an overly generic “kitchen sink” approach to disclosing risks. Additionally, registrants should review their risk factors to avoid hypothetical language if the event described has actually occurred.

Potential Topics to Consider in Connection With Risk Factor Updates

Israel–Iran hostilities and related regional instability may lead to uncertainty due to airspace closures, shipping and energy‑market volatility linked to Strait of Hormuz constraints, logistics and airport disruptions, cyber risk, and knock‑on effects of sanctions and export‑control regimes. Tailored disclosure should focus on areas where the company faces plausible direct or indirect impacts (energy cost spikes, shipping delays, supplier/customer concentration in the region, workforce mobilization, insurance/force‑majeure, cybersecurity, sanctions/export‑controls or financing conditions).
Additional risk factor topics are discussed in the January Quarterly Securities & Capital Markets Update.

As this quarter’s developments illustrate, companies face an evolving regulatory and compliance landscape requiring proactive attention. Companies should assess their proxy season preparedness, governance frameworks, insider trading policies and filing protocols in light of these changes. Equally important is monitoring the developing risk factor considerations, including those related to geopolitical conflicts, to ensure that public disclosures remain current, accurate and tailored to each registrant’s specific circumstances. Taking a proactive approach now will help mitigate legal and reputational risk and position companies to respond effectively as the regulatory environment continues to evolve.

For questions about these topics, contact the authors, your McGuireWoods contact or a member of the firm’s Public Company Advisory Practice Group.

[1] Canada’s National Instrument 55-104 – Insider Reporting Requirements and Exemptions; Articles 12, 17, and 20 of the Chilean Securities Market Law (Ley de Mercado de Valores, Ley No. 18,045) and General Rule (Norma de Carácter General) No. 269; Article 19 of the European Union Market Abuse Regulation (Regulation (EU) No. 596/2014, as amended by Regulation (EU) No. 2024/2809); Article 173 of the Republic of Korea Financial Investment Services and Capital Markets Act and Article 200 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act; Article 56 of the Listing Rules and implementing directives of SIX Swiss Exchange as approved by the Swiss Financial Market Supervisory Authority; and Article 19 of the United Kingdom Market Abuse Regulation (Regulation (EU) No. 596/2014).