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The SEC's Advisory Committee Wants AI Disclosure Rules. The Commission Is Cautious. What Companies Should Do Now.
On December 4, 2025, the SEC's Investor Advisory Committee voted to advance a formal recommendation that the agency issue guidance requiring public companies to disclose information about the impact of artificial intelligence on their businesses. The vote was not unanimous — two committee members voted against, citing concerns that the recommendation would increase disclosure burdens at a time when the Commission is focused on reducing them — but it passed, and it is now formally before the Commission.
The recommendation carries no binding authority. But it is a meaningful signal about where institutional investor expectations are heading, regardless of the Commission's pace.
What the IAC Recommended
The recommendation has three pillars: public companies should adopt and disclose a definition of "artificial intelligence" as they use the term in their business; they should disclose board-level oversight mechanisms for AI deployment; and they should separately report on material AI deployments in both internal operations and consumer-facing products, using a materiality standard.
The underlying concern is inconsistency. As the IAC noted, the lack of comparability in AI disclosures "can be problematic for investors seeking clear and comparable information." Companies describe their AI involvement in wildly different ways — some in operational detail, others in boilerplate language that says very little. Without a definitional framework, investors cannot compare AI risk or capability across companies in the same sector.
The recommended framework is deliberately technology-neutral and materiality-based, modeled on the structure of the SEC's 2023 cybersecurity disclosure rules. It would not require disclosure of every AI use, only those that have or could have a material impact on business, operations, or financial condition.
The Commission Has Been Lukewarm
Chairman Atkins and Commissioner Peirce signaled skepticism at the December meeting. Atkins has indicated that existing principles-based disclosure requirements already sufficiently address AI, and the Commission has withdrawn several Biden-era AI-related rule proposals. The IAC recommendation may therefore not produce formal rulemaking quickly.
But waiting for a formal rule is not a viable strategy. Institutional investors, proxy advisory firms, and large asset managers are already evaluating AI governance disclosures in proxy statements and annual reports. The IAC recommendation gives them additional basis to push for more. And the SEC has made clear — through its enforcement record — that materially misleading AI disclosures are actionable under existing fraud provisions, regardless of whether a specific AI disclosure rule exists.
What Companies Should Do Before Rules Arrive
The practical steps are not complicated: review existing AI-related disclosures for accuracy and specificity; establish a working definition of AI as used in the company's actual operations; confirm that board oversight of AI deployment is described in the proxy statement; and identify material AI dependencies — including third-party AI providers — that warrant disclosure. Companies that address these questions now are better positioned when investor inquiries arrive, when proxy advisors update their frameworks, and when the SEC eventually formalizes its guidance.
Finiti Legal perspective: The IAC recommendation reflects a trajectory moving in one direction regardless of the current Commission's pace. Companies that describe AI involvement vaguely — or that use AI in compliance processes without disclosure — are accumulating exposure that will become more difficult to manage as expectations formalize. The most important principle is precision: disclose what the company actually does, describe oversight mechanisms that actually exist, and avoid language implying capabilities the technology does not have. The enforcement record demonstrates the SEC is already applying that standard.