A New Era for Boardroom Confidentiality

Companies and their boards can now be more confident that their legal advice will remain confidential, following a landmark decision by the Judicial Committee of the Privy Council in Jardine Strategic Limited v Oasis Investments II Master Fund Ltd & Ors No 2 [2025] UKPC 34.

In Jardine, the Privy Council swept aside the 140-year-old “Shareholder Rule” - a doctrine that had long prevented companies from asserting legal advice privilege in litigation against their shareholders. Originally rooted in 19th-century case law, the Rule was based on the idea that shareholders were entitled to see legal advice paid for with company funds. Over time, its justification shifted to “joint interest privilege,” but despite developments in the law, the Shareholder Rule remained largely untouched - until now.

Recent decisions, including the High Court’s (some might say surprising) ruling in Aabar v Glencore [2024], began to challenge the Rule’s foundations. With Jardine, the Privy Council has now firmly closed the door on the Shareholder Rule, confirming that companies can assert privilege against shareholders, bringing long-awaited clarity to boards and lawyers alike.

The decision

In Jardine, the Privy Council was asked to decide whether a company can withhold documents from its shareholders during litigation by claiming legal advice privilege. After examining the Shareholder Rule’s foundations - or lack thereof – the Privy Council concluded that the Shareholder Rule was “a rule without justification.” In a striking passage, the judgment observes:

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

The Privy Council also emphasised the importance of certainty in this area, firmly rejecting any suggestion that the Shareholder Rule might apply on a case-by-case basis: 

“[T]he need for certainty as to whether legal advice will be privileged or not demands a bright line, otherwise it will fail to serve the objective of encouraging the taking of legal advice.”

In practice – Burges Salmon comment

The Jardine decision is a clear win for companies and their boards. It removes long-standing uncertainty around legal advice privilege and gives directors greater confidence that legal advice can be sought without fear of later disclosure to shareholders. This clarity is especially valuable in contentious or high-stakes scenarios, where the ability to obtain candid legal advice is critical to sound governance and risk management.

For larger corporates and listed entities, the ruling aligns English law with other major common law jurisdictions and eliminates a disclosure route that claimants might have previously relied on in shareholder litigation, including FSMA s.90/90A claims.

However, the implications for smaller and closely held companies are more nuanced. While the ruling confirms that privilege applies equally to SMEs, family businesses, and micro-entities, it also means that minority shareholders in those structures can no longer assume access to legal advice simply by virtue of their shareholding. In practice, this places greater emphasis on contractual safeguards - such as shareholder agreements and bespoke governance provisions - to define access rights and manage expectations.

In tightly held companies where the line between shareholder and company is often blurred, this shift may feel like a loss of transparency. But it also removes the uncertainty that may previously have discouraged directors from seeking legal advice for fear of internal disclosure. The message from the Privy Council is clear: privilege belongs to the company, not its shareholders, and any exceptions must be expressly agreed or fall within established legal categories like fraud or joint retainers.

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Burges Salmon’s dispute resolution team is dedicated to achieving successful outcomes for our clients, focusing on resolving your disputes swiftly and effectively. We prioritise outcomes, not just the process, working alongside you to ensure the right solution is found, minimising the impact on your business while maximising success. If you would like to discuss any of the issues raised in this article, or the potential impact of the decision in Jardine, then please contact Michael Ward or Amy Khodabandehloo.

This article was written by Amy Khodabandehloo and Matthew Pegler.