Case Digest No. 12 · Company and shareholder disputes
Legal professional privilege and the shareholder rule
Jardine Strategic Ltd v Oasis Investments Ltd [2025] UKPC 34
The Privy Council held that the shareholder rule has no sound legal foundation and, by a Willers v Joyce direction, should no longer be applied in England and Wales.
Judicial Committee of the Privy Council
[2025] UKPC 34
July 2025
Decision at a glance
The question, answer and consequence.
- Legal question
- The central issue was legal professional privilege and the shareholder rule.
- Court's answer
- The Privy Council held that the shareholder rule has no sound legal foundation and, by a Willers v Joyce direction, should no longer be applied in England and Wales.
- Practical consequence
- The Privy Council's rejection of the shareholder rule reshapes access to privileged company communications in shareholder litigation. Parties should account for ordinary privilege principles rather than assuming that shareholder status creates a special exception.
Factual background
Two companies within the Jardine Matheson group, Jardine Strategic Holdings Ltd and JMH Bermuda Ltd, were amalgamated to form Jardine Strategic Ltd (the Appellant). This amalgamation meant that all the shares in Jardine Strategic Holdings Ltd were cancelled. Statutory provisions in the Companies Act 1981 provide that the Appellant Company is required to pay fair value for those cancelled shares to shareholders who voted against the proposed amalgamation. However, those shareholders (the Respondents) were not satisfied with the figure offered to them as fair value for their shares. As such, the Respondents triggered the statutory mechanism under which the court is required to determine the fair value of the shares. In doing so, an issue arose regarding whether the Respondents are entitled to see the legal advice that was given to the JMG when it was setting the value offered as fair value to the Respondents. The Respondents recognised, however, that this advice was of a type which would usually be protected by legal professional privilege, and so they seek to rely on an overriding exception.
Issue
The central issue was legal professional privilege and the shareholder rule.
Procedural history and reasoning
for Bermuda, and a Willers v Joyce direction made by the Privy Council, “the Shareholder Rule” is abrogated for the purpose of litigation in the courts of England and Wales. 2.The original proprietary justification for the Rule has fallen away as it is inconsistent with the established notion of separate legal personality. 3.There is no, or at least no sufficient, analogy that can be drawn between a company shareholder relationship and those relationships recognised as falling within the joint interest family of relationships to justify its inclusion. 4.A circumstances-based approach to determining whether legal advice is subject to legal professional privilege in such circumstances would be unacceptably uncertain and, therefore, unsuitable. “THE SHAREHOLDER RULE” “ … a party cannot resist production of documents which have been obtained by means of payment from the moneys belonging to the party applying for their production.
Lord Halsbury LC in Salomon v Salomon [1897] AC 22 Therefore, the original proprietary justification for the Shareholder Rule, in the words of the Privy Council, “faded quietly away, without anyone apparently noticing” (para 33). Other justifications for the rule have been suggested, including the Shareholder Rule being a sub-set of joint interest privilege, however this justification has also been previously rejected by the courts. Nugee J in Sharp v Blank [2015] EWHC 2681 (Ch) The Shareholder Rule was recently subject to scrutiny in the courts of England and Wales in Various Claimants v G4S plc [2023] EWHC 2683 (Ch) and Aabar Holdings SARL v Glencore plc [2024] EWHC 3046 (Comm). The latter’s ruling that the Shareholder Rule should be abandoned is subject to pending appeal. LEGAL PROFESSIONAL PRIVILEGE R v Derby Magistrates’ Court, Ex p B [1996] AC 487, 507D and 507H Lord Taylor of Gosworth described privilege as a fundamental condition on which the administration of justice as a whole rests and acknowledged it as a fundamental right.
Lord Scott also described the policy behind the privilege: “the idea that it is necessary in our society … that communications between clients ad lawyers … should be secure against the possibility of any scrutiny from others … “ JUDGMENT - PRIVY COUNCIL Strict Status-Based Shareholder Rule “The Board is satisfied that the Shareholder Rule forms no part of the law of Bermuda, and that it ought not to continue to be recognised in England and Wales either” (para 80). The Privy Council found that the Shareholder Rule’s disadvantages easily outweighed its advantages. ADVANTAGES Ancient lineage Creation of a bright line DISADVANTAGES Original proprietary justification inconsistent with current understanding of separate legal personality Joint interest justification cannot sensibly justify an automatic status-based denial of legal professional privilege - there is not always a community of interest between every company and its shareholders “The status-based automatic Shareholder Rule is therefore now, and in truth has always been, a RULE WITHOUT JUSTIFICATION.
Decision and key points
The Privy Council held that the shareholder rule has no sound legal foundation and, by a Willers v Joyce direction, should no longer be applied in England and Wales.
- As a result of this successful appeal from the Court of Appeal for Bermuda, and a Willers v Joyce direction made by the Privy Council, “the Shareholder Rule” is abrogated for the purpose of litigation in the courts of England and Wales.
- The original proprietary justification for the Rule has fallen away as it is inconsistent with the established notion of separate legal personality.
- There is no, or at least no sufficient, analogy that can be drawn between a company shareholder relationship and those relationships recognised as falling within the joint interest family of relationships to justify its inclusion.
Why this decision matters
The Privy Council's rejection of the shareholder rule reshapes access to privileged company communications in shareholder litigation. Parties should account for ordinary privilege principles rather than assuming that shareholder status creates a special exception.
Particularly relevant to: Companies, shareholders, boards, in-house counsel and litigation teams.
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