The U.S. Securities and Exchange Commission announced Monday that it will not review most of the requests it gets from publicly traded companies hoping to exclude shareholder proposals from corporate ballots this proxy season, saying that it will not object to the exclusions due to time and resource constraints.

The SEC's Division of Corporation Finance put out a statement outlining a new policy for shareholder proposal exclusions for the current proxy season.

Publicly traded companies often ask the division for a letter stating that the company won't face an enforcement action for excluding certain proposals, but the agency said it won't review those requests this year and will instead just allow companies to exclude proposals based on the company's representation that the proposal is improper.

"Due to current resource and timing considerations following the lengthy government shutdown and the large volume of registration statements and other filings requiring prompt staff attention ... the division has determined to not respond to no-action requests for, and express no views on, companies' intended reliance on any basis for exclusion of shareholder proposals," the statement read.

The only exclusion letters it plans to review and respond to are those requesting to exclude proposals that could violate state law, because the agency said that there isn't currently much guidance on that type of exclusion.

In making the decision to review exclusions based on state law, the division pointed to a speech that SEC Chair Paul Atkins gave in Delaware last month.

In that speech, Atkins seemed to encourage companies to seek the SEC's staff views on whether Delaware law prohibits shareholders from forcing votes on nonbinding issues. Delaware is where the majority of the nation's Fortune 500 companies are incorporated.

Atkins argued that it is possible that there is no right for shareholders to force a vote on such proposals under that state's laws.

"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," he said.

Erik Gerding of Freshfields LLP, the former director of the SEC's Division of Corporation Finance, told Law360 in an email Monday that Delaware's courts may take a different position than that expressed by Atkins.

Shareholders may challenge the position in court, he said.

"If [the courts] do agree [with Atkins], another question is whether this theory applies to all nonbinding shareholder proposals or only ones dealing with 'environmental' or 'social' matters," Gerding said.

Under the Biden administration, the SEC allowed shareholder proposals on hot-button topics like climate change and abortion to proceed to a vote over the objection of business groups and conservative activists.

The SEC's sole Democratic commissioner, Caroline Crenshaw, issued a statement Monday slamming the new policy as "an act of hostility toward shareholders."

She took particular issue with the letters of no objection that the division said it will grant to companies that self-represent that they have a reasonable basis to exclude a proposal.

The statement "cloaks itself in neutrality by expressing that the division will not weigh in on any company's exclusion of shareholder proposals, but then it hands companies a hall pass to do whatever they want," Crenshaw said. "It effectively creates unqualified permission for companies to silence investor voices (with 'no objection' from the commission)."