The Bermudian Privy Council’s decision in Jardine Strategic Ltd v Oasis Investments II Master Fund Ltd ([2025] UKPC 34) marks a pivotal moment in the evolution of legal professional privilege.

In a judgment handed down on 24 July 2025, the Board decisively rejected the long-standing “Shareholder Rule”: a doctrine that had allowed shareholders to access privileged legal advice obtained by a company. The Board declared that it no longer forms part of the law of Bermuda or of England and Wales.

Background to the dispute

The case arose from the 2021 amalgamation of Jardine Strategic Holdings Ltd and JMH Bermuda Ltd, forming Jardine Strategic Ltd (the Company). Shareholders who dissented from the transaction were entitled under Bermuda’s Companies Act 1981 to receive “fair value” for their cancelled shares. Disputing the offered price of US$33 per share, a group of shareholders initiated appraisal proceedings (i.e. the statutory mechanism set out in the Companies Act 1981 under which the court is required to determine the fair value of those shares for the Company to pay).

A separate judgment was given in relation to whether those shareholders were entitled to seek such a determination from the court. The particular judgment that is the subject of this article, handed down in July, concerned whether those shareholders could compel disclosure of legal advice received by the Company in determining the fair value of the shares. The Company resisted making these documents available (despite listing them in discovery), asserting legal advice privilege.

The plaintiffs asserted that, as a rule of Bermudian law, a company cannot, in the course of litigation between it and shareholders or former shareholders, withhold documents from inspection on the ground that the documents are covered by legal advice privilege. This is known as "the Shareholder Rule".

The plaintiffs invoked the Shareholder Rule, arguing that as shareholders (or former shareholders when the advice was sought or received), they had a right to inspect such documents.

Limitations of the Shareholder Rule

It is important to note that at the outset, the Board was keen to define the limits of the Shareholder Rule as advanced by the plaintiffs. The plaintiffs acknowledged that legal advice obtained by the Company after litigation had commenced or was reasonably anticipated remains protected by legal professional privilege and falls outside the scope of the Shareholder Rule. This point was addressed in a supplemental judgment by the Chief Justice, which raised the key question of when the parties' relationship became adversarial, thereby marking the moment from which privilege could no longer be overridden by the Shareholder Rule.[1]

Secondly, the plaintiffs conceded that the Shareholder Rule operates solely within the confines of litigation-related disclosure. It does not grant shareholders a general entitlement to inspect company documents, including privileged legal advice, outside the context of legal proceedings. Their position was clear: the Shareholder Rule is not a tool for routine access to internal communications, but rather a specific exception invoked during disclosure (or discovery in Bermudan cases) in disputes between the company and its current or former shareholders.[2]

The Shareholder Rule: origins and demise

Historically, the Shareholder Rule was rooted in 19th-century case law, notably Gouraud v Edison Gower Bell Telephone Co of Europe (1888) 57 LJ Ch 498, which analogised shareholders to beneficiaries under a trust. The rationale was that shareholders, having indirectly paid for legal advice through company funds, should be entitled to see it.

In recent years, the foundations of the Shareholder Rule have come under increasing scrutiny. Traditionally justified on the basis that shareholders, as indirect funders of legal advice through company assets, should be entitled to inspect such advice, the Rule has long been analogised to the trustee-beneficiary relationship. However, this proprietary rationale has been steadily eroded in light of modern corporate law principles affirming the company’s separate legal personality.

Judicial discomfort with the Shareholder Rule was notably expressed by Michael Green J in Various Claimants v G4S plc [2023] EWHC 2683 (Ch), where he described the Shareholder Rule’s foundation as “somewhat shaky.” He observed that shareholders have no direct proprietary interest in company property and that the analogy with trust law no longer holds water. Despite these concerns, Green J felt bound by precedent and left it to higher courts to reconsider the Shareholder Rule’s validity.

That reconsideration came in full force in Aabar Holdings SARL v Glencore plc [2024] EWHC 3046 (Comm), where Picken J undertook the first direct challenge to the Shareholder Rule in English law (see our previous article). Aabar, a shareholder in Glencore, sought disclosure of privileged documents, invoking the Shareholder Rule. Glencore responded by denying the Shareholder Rule’s existence altogether. Picken J agreed and held that the Shareholder Rule should be abandoned.

The decision in Aabar was a watershed moment. Although Picken J granted permission to appeal, the Supreme Court declined a leapfrog appeal, noting that the same issue was likely to be resolved by the Privy Council in Jardine Strategic. That prediction proved accurate.

The Privy Council’s ruling

The Board stressed that the proprietary basis for the Shareholder Rule is “wholly inconsistent with the proper analysis of a registered company as a legal person separate from its members”.[3] Companies are separate legal entities; shareholders do not own company property. The Board concluded that the Shareholder Rule’s foundation had collapsed and that its continued application was unjustified. In the words of Lord Briggs and Lady Rose:

 “Like the emperor wearing no clothes in the folktale, it is time to recognise and declare that the Rule is altogether unclothed.”[4]

Joint interest privilege: rejected as a replacement

The respondents sought to salvage the Shareholder Rule by reframing it as a subset of joint interest privilege (rather than an automatic Shareholder Rule applicable in every case). Joint interest privilege is a doctrine that allows parties with a shared legal interest to access privileged communications. The Board were clear to make the point that they were not conducting a general review of the joint interest privilege.[5] However, they found that the company/shareholder relationship is not analogous to the other relationships that did give rise to joint interest privilege (such as trustee/beneficiary, principal/agent, partners, joint venturers and certain insurance relationships).

The Board highlighted the diversity of shareholder interests, especially in large companies, and the potential for conflict or opposing views between shareholders.[6]

Implications

The Privy Council’s decision in Jardine Strategic not only clarifies the law on legal professional privilege in shareholder disputes, but it also reshapes the strategic litigation landscape for both companies and shareholder claimants.

By abolishing the Shareholder Rule, the judgment removes a key tactical lever that shareholders have historically used to put companies under pressure. The potential to access internal legal advice has often served as a point of leverage, encouraging claims or settlements. With that avenue now closed, we may see a decline in shareholder litigation, particularly in marginal or speculative cases where access to privileged material was a motivating factor.

Moreover, the decision is likely to reduce satellite litigation and procedural skirmishes over disclosure and privilege that frequently accompany shareholder disputes. By reaffirming the sanctity and certainty of legal professional privilege, the Board has drawn a distinct line that should streamline litigation and allow parties to focus on substantive issues.

For companies, this is a welcome development. It reinforces the ability of boards to seek candid legal advice without fear of future exposure. For practitioners, it simplifies privilege analysis and reduces the risk of costly and distracting interlocutory battles

An interesting procedural quirk: A Willers v Joyce direction: binding in England and Wales

Interestingly, the Board issued a Willers v Joyce direction, declaring that its decision should be treated as binding in England and Wales. This ensures uniformity across jurisdictions and aims to resolve lingering uncertainty following Aabar v Glencore [2024] EWHC 3046 (Comm), where the High Court had already questioned the Rule’s validity.

However, we should note that in the Aabar v Glencore case Picken J granted permission to appeal, and that appeal remains to be heard by the Court of Appeal in England. There is therefore still the possibility that the Court of Appeal in England might conclude that it was bound by the earlier authority to maintain the Shareholder Rule. Watch this space!