SB 2337 Stunted: Texas Scraps Short-term Efforts to Revive Proxy Advisor Bill

26 November 2025

By Jack Grogan-Fenn

Ken Paxton, Attorney General of Texas, has this week reportedly announced that the state has scrapped short-term efforts to restore the polarising Senate Bill (SB) 2337 which would have major implications for proxy advisors.

In September, a preliminary injunction was granted against SB 2337 by a Trump-appointed Republican judge following two separate lawsuits by major proxy advisors with a trial due to start on 2 February 2026. In filings withdrawing the state’s challenges, Texas’ Paxton said that the US Court of Appeals for the Fifth Circuit is “highly unlikely” to rule on requests by Texas to end a hold on SB 2337 before another court acts.

Key Takeaways:

Texas Withdraws Immediate Efforts to Push SB 2337

• The Lone Star State has reportedly abandoned short-term attempts to reinstate SB 2337 after concluding that the Fifth Circuit Court of Appeals is unlikely to lift the injunction before a different court acts.

Legal and Regulatory Pressure Intensifies Against Proxy Advisors

• Proxy advisors face mounting lawsuits and investigations from Texas, Florida and scrutiny from the SEC under Chair Paul Atkins, alongside significant changes to the commission’s no action approach during the 2026 proxy season and to Rule 14a-8 that risk restricting shareholder proposal rights and increase filing thresholds.

Minerva Analytics Offers Exclusive Insight on Governance Risks

• SB 2337 is part of a broader trend in Texas governance that could undermine shareholder rights and proxy advisor independence. Minerva provides clients detailed analysis of these developments, including the implications of SB 2337 and SEC rule changes, by preparing specific briefings that help clients understand and respond to increasing regulatory and political pressures.

SB 2337 requires proxy advisors that “deviate” from acting in the “financial interest” of shareholders to “clearly disclose that fact”, including advisors recommending votes based on environmental, social and governance (ESG) investing, diversity, equity, or inclusion (DEI) factors and social credit or sustainability scores. It applies to proxy advisor services provided to companies and other business entities that are organised or created under Texas law, have their principal place of business in Texas, or are a foreign entity proposing to become a domestic Texas entity by merger, conversion or otherwise.

However, two major proxy advisors launched lawsuits against the bill in July which saw its implementation pushed back by at least several months, as reported by Minerva Analytics. The cases filed by two different proxy advisors reportedly argued that the law was unconstitutional and eroding their First Amendment right to advise clients.

Minerva also filed a Texas Public Information Act (TPIA) request (freedom of Information request) with the Texas Attorney General in September seeking disclosure of communications between the Attorney General’s office, the Texas Stock Exchange – which had moved to intervene in support of SB 2337 in August - and related parties concerning proxy advisory services and SB 2337. The objective is to clarify whether coordination has occurred and to safeguard investors’ right to independent analysis free from political interference.

SB 2337 is part of an attempt by Texas to favour companies and make the state look more enticing for businesses by kneecapping proxy advisors and watering down shareholder rights. SB 2337 and other governance-related developments in Texas this year which risk damaging the interests and rights of shareholders are explored in a briefing exclusively available to Minerva Analytics clients. To find out more about this briefing and the other benefits that being a Minerva client can offer contact us by email at hello@minerva.info.

Proxy advisors have increasingly been in the crosshairs of politicians this year, with them being prominently portrayed as bogeymen helping to stunt the interests of businesses, a trend which has exponentially grown since Donald Trump started his second term as US President at the start of this year.

This has included proxy advisors being subject to Republican-led legal action from Texas and other states. In September, a new investigation into two major proxy advisors was commenced by Texas’ Paxton accusing them of “potentially misleading institutional investors and public companies”, as reported by Minerva Analytics. 

Last week, Florida Attorney General James Uthmeier launched a new “major enforcement action” against the same two proxy advisors. The case alleges that the firms had “misled Florida consumers, abused their dominance over the shareholder-voting market, and weaponized their influence to impose an ideological agenda on American companies and Florida retirees”. The complaint charges both firms with violating Florida’s consumer protection and antitrust laws by “deceiving investors, coordinating their services, and steering corporate governance in ways disconnected from financial performance”. Next steps on the case from here are yet unclear.

US Securities and Exchange Commission (SEC) Chair Paul Atkins said in an interview earlier this month that the commission will scrutinise the role of proxy advisory firms and the influence of large institutional investors over the process of shareholder voting, as well as introducing actions to tackle this perceived problem. In comments made during a Fox Business interview, Atkins said “the abuse of the corporate governance system and weaponization of shareholder proposals by politicized shareholder activists”.

Shareholders also face setbacks as a result of changes being made by the SEC under the stewardship of renowned shareholder rights critic Atkins, including overhauling its no action approach and to Rule 14a-8. Last week, the SEC announced that it will not respond to company ‘no action’ requests to exclude shareholder proposals during the 2026 proxy season, as reported by Minerva Analytics. This move risks handing unprecedented discretion to corporate management and threatens to sideline investor voices on key environmental and social issues. The decision from 1 October 2025 through 30 September 2026 and means that companies can now block proposals without SEC staff review, potentially leaving litigation as shareholders’ only recourse.

Since Atkins took over as Chair of the SEC, Rule 14a-8 has been amended, introducing more stringent requirements over the amount of investment required to file and the support needed to resubmit proposals, as reported by Minerva Analytics. As a result of the changes, shareholders must have invested a minimum of U$25,000 in a company for a year to file a proposal at an AGM, while proposals must receive at least 5% of votes from investors to be refiled.

These changes which risk being severely detrimental to shareholders are covered in greater detail by Minerva’s client briefing, as well as the impact of Texas’ governance approach shift.

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