On 24 July 2025, the Privy Council delivered a transformative judgment in Jardine Strategic Holdings Ltd v Oasis Investments II Master Fund Ltd and others [2025] UKPC 34, abolishing the long-standing “Shareholder Rule”, a doctrine that had prevented companies from asserting legal advice privilege against their shareholders.
This decision marks a significant evolution in corporate law and privilege jurisprudence.
What Was the Shareholder Rule?
Dating back to the 19th century, the Shareholder Rule held that companies could not withhold legal advice from shareholders, except in hostile litigation. Rooted in outdated proprietary reasoning, it assumed shareholders had a right to access advice paid for with company funds. Despite its shaky legal foundation, the rule persisted for over 140 years, creating uncertainty in corporate disputes.
The Privy Council’s Ruling
The Privy Council decisively rejected both the original proprietary justification and modern attempts to revive the rule through “joint interest privilege.” Lord Briggs and Lady Rose described the rule as “altogether unclothed,” highlighting its incompatibility with the principle of separate legal personality established in Salomon v Salomon.
Importantly, the Board issued a Willers v Joyce direction, confirming that English and Welsh courts should treat Jardine as authoritative domestic law. This ensures consistency across jurisdictions and prevents further appeals on the rule’s validity.
Why This Matters for Companies
The decision strengthens companies’ ability to seek confidential legal advice without fear of compelled disclosure to shareholders. This is particularly relevant in:
- Corporate transactions where shareholder and company interests diverge;
- Governance matters involving conflicting shareholder classes; and
- Strategic litigation involving minority shareholders.
Legal teams can now operate with greater certainty, reducing the risk of satellite litigation over privilege and simplifying disclosure processes.
Implications for Ongoing Litigation
Many shareholder disputes across jurisdictions had been paused pending the outcome of Jardine. The ruling provides clarity, but also raises questions:
- What happens in cases where privileged material was disclosed under the now-defunct rule?
- How will courts approach “joint interest privilege” in other contexts?
The Board deliberately limited its analysis to the company-shareholder relationship, leaving broader questions for future consideration.
A Modern Lens on Corporate Reality
The judgment reflects a sophisticated understanding of contemporary corporate life. Directors of large companies must balance the interests of diverse stakeholders, shareholders, creditors, employees, and others. The Shareholder Rule, rooted in assumptions of shareholder unity, was ill-suited to this complexity.
By favouring bright-line rules over fact-specific exceptions, the Privy Council has prioritised legal certainty, a move welcomed by corporates and their legal advisers.
Conclusion
Jardine marks the end of a legal anachronism and the beginning of a more coherent approach to privilege in corporate disputes. It reinforces the principle that companies, like any legal person, are entitled to seek confidential legal advice. The decision aligns privilege law with modern corporate practice and sets a clear path forward for shareholder litigation.
Stuart Nevin is an Associate Director in the Real Estate Disputes team at Cleaver Fulton Rankin.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Dispute Resolution team at Cleaver Fulton Rankin for further advice or information.
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