No-Action Letter
An SEC staff response stating that no enforcement action will be recommended if a party proceeds with a described transaction or practice.
What is No-Action Letter?
A no-action letter is a response issued by the SEC's Division of Corporation Finance, Division of Investment Management, or Division of Trading and Markets to a company or individual who has requested guidance on whether a proposed transaction or activity would violate federal securities laws. The SEC staff reviews the request and, if they agree the proposed conduct would not violate the relevant rules, issue a letter stating they would not recommend enforcement action to the Commission. No-action letters are not legally binding — they reflect staff opinion, not formal SEC rule-making — but they provide practical guidance and are widely relied upon by legal practitioners and market participants. The letters are publicly available on the SEC's website and collectively form a body of informal interpretive guidance that shapes securities law practice.
Example
When a company wants to exclude a shareholder proposal from its proxy statement (arguing it falls under an SEC exemption), it submits a no-action request to the SEC's Division of Corporation Finance. If the staff issues a no-action letter agreeing the proposal can be excluded — as happened when Exxon sought to exclude a climate-related shareholder proposal in 2024 — the company proceeds without the proposal in its proxy. If the staff denies the request, the company must include the proposal. This process determines which shareholder resolutions make it to a vote at annual meetings.
Source: SEC — No-Action Letters