Privy Council abolishes a shareholder’s right to see a company’s legal advice

If a shareholder sues a company, are they entitled to see legal advice obtained by the company (before litigation was contemplated), or can the company claim privilege?

Somewhat surprisingly, there is a longstanding rule that a shareholder can see a company’s legal advice, and that the company cannot claim legal advice privilege against a shareholder.

As recently as 2021, the New Zealand Supreme Court approved that rule. It explained that under a “joint interest exception” to privilege, a company and its shareholders may share a joint interest in legal advice obtained by the company – even though the company is not an agent of its shareholders, and even though the shareholders do not have a direct proprietary interest in the assets of the company.

Last week, however, the Privy Council abolished the rule, in a decision on an appeal from Bermuda: Jardine v Oasis [2025] UKPC 34.

The Privy Council said that the “only two advantages [of the rule] were its ancient lineage and its creation of a bright line”, but “its disadvantages easily outweigh those two advantages.” It explained that “It would discourage companies from obtaining candid legal advice in confidence. It would ignore the separate personality of the company and it would wrongly assume a simple coincidence of interests contrary to the typical commercial reality.”

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

Although New Zealand abolished appeals to the Privy Council two decades ago, the decision will be persuasive the next time the issue comes before the New Zealand courts. That said, it remains to be seen whether the New Zealand courts will follow the Privy Council’s lead and unclothe the Rule.