Two recent judicial decisions have brought long-standing assumptions about the so-called “Shareholder Rule” under critical scrutiny. In Aabar Holdings S.à.r.l. v Glencore plc & ors, the English High Court held that companies may assert legal professional privilege against their shareholders, rejecting the existence of any general rule to the contrary under English law. That position was confirmed in Jardine Strategic Limited v Oasis Investments II Master Fund Ltd & ors, in which the Privy Council not only abrogated the Shareholder Rule in Bermuda but also issued a Willers v Joyce direction making its decision binding in England and Wales. Together, these rulings decisively close the door on shareholder claims to privileged corporate advice, reaffirming the autonomy of the corporate client and potentially reshaping the landscape of shareholder-related litigation and arbitration.
I. INTRODUCTION
On 27 November 2024, the English High Court handed down judgment in Aabar Holdings S.à.r.l. v Glencore plc and others [2024] EWHC 3046 (Comm).1
Mr Justice Picken held that the so-called “Shareholder Rule,” a principle previously assumed to prevent companies from asserting legal professional privilege against their own shareholders, does not exist under English law.
In March 2025, the Privy Council heard arguments in Jardine Strategic Limited v Oasis Investments II Master Fund Ltd and 80 others (No 2) [2025] UKPC 34, an appeal from Bermuda that engaged with substantially the same core question: can shareholders compel disclosure of privileged legal advice from the companies they own?
On 24 July 2025, the Privy Council handed down its judgment in Jardine, rejecting the Shareholder Rule. The Privy Council also issued a Willers v Joyce (No 2) [2016] UKSC 44 direction, thereby rendering its decision binding in England and Wales. The position under English law is now settled: the Shareholder Rule no longer applies.
The relevance of the Aabar and Jardine judgments extends well beyond companies incorporated or domiciled in England (or Bermuda). This is because English privilege rules may apply to non-English parties involved in cross-border litigation and arbitration, based on factors such as the forum in which the dispute is heard or the legal framework governing the proceedings. English courts will apply the lex fori to issues of legal professional privilege – meaning that if a dispute is litigated in England, English privilege rules will apply, regardless of where the parties are based, or by whom or where the legal advice was given.2 English legal professional privilege rules may also apply in international arbitration or litigation proceedings before foreign courts, particularly when England is the seat of the arbitration, English law is the substantive law of the dispute, or English-qualified lawyers are involved. For any international business, staying up to speed with English privilege rules is therefore essential to managing disputes risk and protecting confidential legal advice from unwanted disclosure.
II. THE SHAREHOLDER RULE: DOCTRINAL FOUNDATIONS
Legal professional privilege is a cornerstone of the English justice system. Indeed, it has been described by the UK House of Lords as a fundamental human right.3 It ensures that any person – whether natural or legal – can seek and receive candid advice without fear that their communications will later be disclosed in court.
But when the client is a company and its shareholders are its ultimate owners, the boundaries of that privilege become less clear. Can shareholders demand access to the company’s privileged legal advice? This question strikes at the heart of corporate transparency, accountability, and the delicate balance of power between shareholders and management.
The so-called “Shareholder Rule” emerged as a possible answer. Historically, the rule was thought to prevent companies from asserting privilege against their shareholders in the context of disclosure – except where the documents were specifically created for the purpose of adversarial litigation between the company and those shareholders. Though rarely tested, the rule was long assumed to offer shareholders a window into a company’s legal affairs.
The rule can be traced to the 19th century case of Gouraud v Edison Gower Bell Telephone Co of Europe (1888) 57 LJ Ch 498 and the English Court of Appeal’s decision in Woodhouse & Co Ltd v Woodhouse (1914) 30 TLR 559, where shareholders were likened to beneficiaries under a trust, with a proprietary interest in the company’s documents.
Yet less than a decade after Gouraud, the UK House of Lords in Salomon v A Salomon & Co Ltd [1897] AC 22 made clear that a company, once incorporated, is a distinct legal person, separate from its shareholders. That decision decisively rejected the idea that a company holds its assets on trust for its members. Instead, it confirmed that a company is both the legal and beneficial owner of its property. The foundational principle of corporate separateness was therefore always in tension with the proprietary rationale underpinning the Shareholder Rule.4
This tension was exposed in Various Claimants v G4S plc [2023] EWHC 2863 (Ch), where Mr Justice Michael Green expressed scepticism about the ongoing validity of the Shareholder Rule. He cast doubt on the rule’s conceptual underpinnings, noting that “the analogy with trustees and beneficiaries is not a particularly strong one,”5 and emphasised that a company is a separate legal person that holds its property for itself, with shareholders having no direct interest in its assets – stating that “there is no ‘common fund’, as such, to which shareholders are entitled.”6
In recent years, some commentators have sought to reframe the Shareholder Rule not as a standalone doctrine, but as an example of joint interest privilege. In The Law of Privilege, Bankim Thanki KC argues that the rule is best understood as part of a broader category of relationships – such as trustee-beneficiary, parent-subsidiary, or as between partners – where legal advice is obtained for the benefit of multiple parties with a shared interest. On this view, if a shareholder and the company shared a joint interest in the subject matter of a communication at the time it was made, legal professional privilege cannot be asserted between them.7
These issues came to a head in two recent cases where the courts confronted the Shareholder Rule directly and examined whether the rule was ever truly part of English or Bermudian law – or merely a convenient fiction rooted in outdated analogies.
III. THE ENGLISH HIGH COURT'S JUDGMENT IN AABAR
The first such case was Aabar Holdings S.à.r.l. v Glencore plc and others [2024] EWHC 3046 (Comm), where the English High Court was asked to decide whether a company can assert legal professional privilege against its shareholders.
The Aabar judgment arose from an ongoing multi-party shareholder litigation against Glencore under Sections 90 and 90A of FSMA. In the lead-up to the first case management hearing, a dispute arose as to whether Glencore could assert legal professional privilege against the claimants, and if so, in what circumstances. What began as a procedural disagreement evolved into an inquiry as to the legitimacy of the Shareholder Rule itself.
Aabar argued that the Shareholder Rule, historically justified on proprietary grounds, had “morphed” into an emanation of what can properly be described as joint interest privilege, a broader procedural principle applicable where parties share a legal interest in the subject matter of a communication at the time it was made.8 Aabar argued that this principle was applicable between a company and its shareholders because English law “treats the shareholder as having a joint interest with the company in communications concerning the administration of the company’s affairs and such communications as being made for the mutual benefit of company and shareholders.”9
Glencore, for its part, contended that the historical origins of the Shareholder Rule and its subsequent development did not support Aabar’s position, that the rule is “anomalous, unprincipled and should no longer be applied,” and that joint interest privilege cannot justify its continued application.10
Mr Justice Picken agreed with Glencore’s position. He found that neither the Shareholder Rule’s original proprietary rationale nor its alleged evolution into joint interest privilege survived scrutiny in modern law. Mr Justice Picken ruled that the proprietary basis was incompatible with Salomon v A Salomon, which established the company as a distinct legal person.11 Further, Mr Justice Picken held that there was no support among the authorities for joint interest privilege being the basis for the existence of the Shareholder Rule.12
Mr Justice Picken also concluded that joint interest privilege is not a freestanding legal doctrine but rather a label applied to particular fact-specific situations, such as shared retainers or fiduciary obligations.13 He found that, even if there was a standalone concept of joint interest privilege, it would not exist in the relationship between companies and shareholders for several reasons, including:
- First, there is nothing in the company-shareholder relationship that justifies a conclusion that a company should be deprived of its otherwise inviolable right to privilege. This relationship lacks the features found in trustee-beneficiary or partnership contexts: shareholders have no proprietary interest in their company’s assets, and directors do not owe direct fiduciary duties to individual shareholders. Further, in contrast to trusts and partnerships, shareholders have no general right to access company documents outside litigation. A shareholder’s relationship with the company is one based on contractual rights against the company under the Articles of Association which often will expressly exclude rights of access – it would be anomalous for a purported joined interest to be able to subvert a clear contractual agreement.14
- Second, public companies often have thousands of shareholders who will be in a constant state of flux. It cannot be said that all shareholders have a joint interest, either with each other or with the company.15
- Third, permitting the application of joint interest privilege to the company-shareholder relationship would undermine the public policy rationale for legal professional privilege, as it would discourage directors from seeking legal advice.16
IV. THE PRIVY COUNCIL’S JUDGMENT IN JARDINE
The English High Court’s rejection of the Shareholder Rule in Aabar was followed soon after by the Judicial Committee of the Privy Council’s judgment in Jardine Strategic Limited v Oasis Investments II Master Fund Ltd and 80 others (No 2) [2025] UKPC 34, an appeal from Bermuda, which concerned whether discontented shareholders could compel disclosure of privileged legal advice in the context of statutory appraisal proceedings.
On 24 July 2025, the Privy Council delivered its long-awaited decision in Jardine. In a detailed and unanimous judgment, the Privy Council held that the Shareholder Rule is not part of the law of Bermuda – and, crucially, is also not part of the law of England and Wales.
The Privy Council expressly referred with approval to the English High Court’s decision in Aabar, describing it as the “first full-frontal challenge” to the Shareholder Rule in English law.17 In its own analysis, the Privy Council adopted an approach similar to Mr Justice Picken in Aabar, rejecting both the proprietary and joint interest privilege justifications for the rule. The heart of the judgment lies in paragraphs 78 to 102, where the Privy Council addressed the arguments advanced by the respondents for the rule’s purported existence.
The Privy Council identified the original foundation of the Shareholder Rule as proprietary. It agreed with Mr Justice Nugee (as he then was) in Sharp v Blank [2015] EWHC 2681 (Ch) that the rule was “not [based on] joint interest,” and noted that joint interest privilege had only “been prayed in aid” by those seeking to preserve the rule after its proprietary basis had collapsed.18 The Privy Council found this shift unconvincing.
Further, the Privy Council held that the traditional proprietary justification was “wholly inconsistent with the proper analysis of a registered company as a legal person separate from its members,” who “have no proprietary interest in the funds of the company used to pay for the advice.”19 Dismissing the proprietary rationale, the Privy Council declared that the Shareholder Rule “is now, and in truth has always been, a rule without justification.”20 In a striking metaphor, it likened the rule to “the emperor wearing no clothes in the folktale,” concluding that “it is time to recognise and declare that the Rule is altogether unclothed.”21
Turning to the alternative joint interest privilege justification, the Privy Council rejected the argument that the company-shareholder relationship is analogous to relationships where such privilege may arise. While joint interest privilege may apply in relationships such as trustee-beneficiary, or as between partners or joint venturers, the Privy Council held that “there is no, or at least no sufficient, analogy” with the company-shareholder relationship to “justify its inclusion” in that category.22 It criticised the assumption that shareholders and companies generally share a legal interest in the subject matter of legal advice, noting that such reasoning “has not been based on any in-depth analysis” and instead reflects “an unthinking habit” rooted in outdated authorities like Gouraud.23
The Privy Council reaffirmed that legal professional privilege must operate with clarity and predictability, and emphasised that any exception to privilege must be governed by a “bright line.”24 In its view, the company-shareholder relationship does not justify any departure from that principle.
Significantly, the Privy Council also issued a Willers v Joyce direction, declaring that its decision should be treated as binding in England and Wales.25 While Privy Council decisions are not ordinarily binding on English courts, the direction ensures that the abrogation of the Shareholder Rule now applies in England and Wales as well as in Bermuda.
The decision in Jardine is therefore dispositive of the Shareholder Rule issue. It confirms that companies may assert legal professional privilege against their shareholders, and that the Shareholder Rule – long assumed but never firmly grounded – is no longer good law.
V. KEY CONSEQUENCES OF THE AABAR AND JARDINE JUDGMENTS
The Privy Council’s judgment in Jardine, following closely on the heels of the English High Court’s judgment in Aabar, is a watershed moment in the English law of privilege. It confirms that shareholders have no general entitlement to access privileged company documents. Their rights must be understood and applied through the framework of corporate personality and contract law – not through the lens of equity or any assumed joint interest with the company.
For corporate boards and in-house counsel, these two judgments offer clarity and reassurance. They dispose of the Shareholder Rule, which had long rested on analogy rather than principle, and affirm that privilege is a right of the company – not a shared entitlement of its members. Legal advice can be sought and received in confidence by company officers and directors, without fear that it will later be exposed to shareholder claimants, including in the context of legal proceedings. That said, these judgments do not affect the ordinary English law rules relating to disclosure and waiver of privilege – for instance, privilege may be waived where a company voluntarily deploys a privileged document in litigation, potentially triggering collateral waiver over related privileged material. They also do not preclude shareholders from seeking access to company documents on other (non-privileged) grounds.
The implication of these judgments is potentially far-reaching. They may shape the trajectory of shareholder litigation and arbitration, especially in the context of collective redress actions, ESG-driven activism, and post-investment corporate disputes; in such cases, shareholder claimants often seek access to internal corporate legal advice to support allegations of corporate mismanagement or disclosure failures.
Yet the global legal approach to shareholder access to privileged corporate documents remains fragmented. While English and Bermudian law have now firmly closed the door on the Shareholder Rule, other jurisdictions – such as the United States – continue to recognise limited shareholder rights to obtain privileged materials, for instance, under the rule in Garner v. Wolfinbarger, 430 F.2d 1093, 1097 (5th Cir. 1970).26
This divergence in approach to corporate privilege underscores the need for multinational companies to understand how the law of privilege operates across multiple jurisdictions beyond a company’s place of incorporation. Tailored legal advice is essential for multinational companies to help them navigate risk and protect sensitive communications, especially when faced with cross-border disputes and investigations.
Footnotes
