‘Shareholder rule’ no longer applicable in England and Wales
- William Kanaan
- Aug 28
- 1 min read
The Judicial Committee of the Privy Council held that the “shareholder rule”, whereby a company could not, in the course of litigation between it and its shareholders, withhold documents from inspection on the ground that the documents were covered by legal advice privilege, should not continue to be recognised in England and Wales.
The case involved an appeal against the upholding of the decision of a lower court by the Court of Appeal for Bermuda in proceedings brought by the plaintiff shareholders that the company was not entitled, because of the shareholder rule, to maintain legal advice privilege in respect of certain legal advice received by its corporate group.
No party in the proceedings had submitted that the common law of Bermuda was different from the common law of England and Wales in the present context. To avoid such doubts, the members of the Board, all also being Justices of the Supreme Court, were firmly of the view that the present decision should also be regarded by courts in England and Wales as abrogating the shareholder rule for the purpose of litigation in those courts, and the Board so declared.
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