A Reset of Legal Advice Privilege and Shareholder Rule: Jardine Strategic Limited v Oasis Investment II Master Fund and 80 Others

Legal privilege is a fundamental protection arising from the attorney client relationship, allowing clients to obtain independent legal advice and act upon it freely.  However, over time, the Shareholder Rule and the doctrine of joint privilege have been recognised as exceptions to legal advice privilege, affording shareholders the right to access legal advice obtained and funded by the company in which they hold shares. 

This Privy Council decision[1] looked at defining the scope of legal advice privilege in the context of whether shareholders of a company are entitled to the legal advice received by a company regarding the fair value of shares paid out to its shareholders.  The shareholders sought to assert their rights under the Shareholder Rule as joint interest privilege.  The Board decided to limit the scope to exclude shareholders joint interest, that it formed no part of the law of Bermuda and ought not to be recognised in England and Wales either.

Although the decision of this case is not binding on any country that does not have the Privy Council as its highest authority, the Board said that it ought to provide weight to common law. 

The Board found that the justification for the expansion of the legal advice privilege as proprietary was inconsistent with a registered company being a legal person separate from its shareholders and therefore it could have no proprietary interest in the funds of the company used to pay for the advice, and that joint interest was just used for the continued existence of the original justification.

Further, that there cannot be a blanket denial of legal privilege to every company by its shareholders because shareholders’ interests cannot be represented uniformly either as a class or a fortiori individually.     “The status-based automatic Shareholder Rule is therefore now, and in truth has always been, a rule without justification.  Like the emperor wearing no clothes in the folktale, it is time to recognise and declare that the Rule is altogether unclothed”[2]

In deciding whether a shareholder relationship falls within joint interest privilege the Board said that it is not analogous to other relationships that might enjoy the privilege because the interests will not always be aligned amongst shareholders.  In large companies the interest of different class of shareholder may diverge, it must balance the interest of many stakeholders not just shareholders. 

The Board agreed with the reasoning of the Court of Appeal that if an exception was made for shareholders, it would discourage companies from obtaining candid legal advice and ignoring the separate personality of the company and that the relationship between a company and shareholders is contractual restricting its right to see company documents including legal advice. 

With this new ruling directors will now be able to feel confident in their management of a company that any legal advice obtained will now be protected against all scrutiny including its shareholders. 

Consider how it will affect activist shareholders, drafting of shareholder agreements, the relationship between holding and operating companies, trustees and beneficiaries, and family offices.

[1]  Jardine Strategic Limited v Oasis Investments II Master Fund Ltd and 80 others (No2) [2025] UKPC 34

[2] Paragraph 82.

The contents of this Insight are generalised, and readers are urged to seek specific advice on matters and not rely solely on this text.

© Vibha Vallabh, Ellora Private Office, October 2025