As a consequence of a landmark decision handed down by the Judicial Committee of the Privy Council, companies can now enjoy the “fundamental right” of legal advice privilege in litigation against shareholders before the English courts.

On 24 July 2025, the Judicial Committee of the Privy Council handed down its judgment in Jardine Strategic Limited v Oasis Investments II Master Fund Ltd and 80 others (No 2) (Bermuda) [2025] UKPC 34 which abolishes the 140-year old “Shareholder Rule” exception to legal professional privilege which, in the context of litigation in England, had previously allowed shareholders to inspect privileged legal advice given to the company by virtue of their status of shareholders.

The Shareholder Rule was originally based on the idea that shareholders, as “owners” of the company’s assets, were entitled to see legal advice paid for from those assets, and later as a subset of “joint interest privilege.”

Despite shareholders typically having no general right to access a company’s documents based on common provisions in the company’s constitutional documents, the Shareholder Rule provided a means whereby shareholder claimants in litigation with the company could secure disclosure of legal advice that the company obtained in relation to the subject matter of the proceedings.

Background

The decision in Jardine arises out of proceedings before the Bermudian courts relating to the restructuring of entities within the Jardine Matheson group in 2021 by which the minority shareholders in Jardine Strategic Holdings Limited (“Holdings”) were bought out. Certain shareholders (the “Dissenting Shareholders) applied to the Supreme Court of Bermuda for an appraisal of the fair value of their shares. The Dissenting Shareholders sought access to legal advice received by Holdings in the context of the restructuring relying on the Shareholder Rule.

Decision

The Privy Council unequivocally rejected the Shareholder Rule noting that “like the emperor wearing no clothes in the folktale, it is time to recognise and declare that the [Shareholder] Rule is altogether unclothed.” The Board’s ratio included the following:

• No valid justification - proprietary or joint interest: The original view that shareholders had a proprietary interest in company assets is inconsistent with modern company law, which treats the company as a distinct legal person. The Board held that there is neither a proprietary nor a sufficient joint interest between the company and shareholders to justify overriding privilege ([81]).
• Certainty and candour: The Board stressed that legal advice must be candid and confidential if directors and management are to act in the company’s best interests. Allowing for the possibility that privileged advice could be accessed by shareholders in litigation would discourage directors from seeking such advice and lead to confusion and uncertainty ([88]-[90], [92]-[98]).

Although this was an appeal from the Bermudian courts, the Privy Council directed that their decision should be regarded as representing the law on privilege applicable in the English courts ([113]).

What this means for companies

The outcome affords clarification and reassurance to companies which can now, in litigation before the English courts, enjoy a “fundamental right” like other litigants and be sure that legal advice received on the underlying issues will not be disclosable to shareholders solely on the basis of their status as shareholders.