Shareholder Rule Gets Short Shrift

Derived from 19th century case law, the general school of thought has been that a company cannot assert privilege against its own shareholder, save in relation to documents that came into existence for the purpose of hostile litigation against that shareholder (the so-called "Shareholder Rule").

In a judgment dated 27 November 2024, Mr Justice Picken (sitting in the English High Court) delivered a landmark ruling decisively rejecting the 'Shareholder Rule' on all bases (the Judgment). The Judgment represents a long awaited, significant, departure from what was considered to be a long-standing legal principle and seeks to align the concept of privilege under English law with contemporary corporate realities. The Judgment also clarifies the concept and scope of Joint Interest Privilege as a mater of English law.