The shareholder rule, the legal principle preventing a company from relying on legal advice privilege as against its shareholders, is no longer part of Irish law following the decision of the Irish High Court in Globoforce Group PLC (trading as Workhuman) v Luxembourg Investment Company 276 SARL and others [2026] IEHC 397.
The Irish High Court reached the same conclusion as the Privy Council in Jardine Strategic Ltd v Oasis Investments II Master Fund Ltd (No 2) (Bermuda) [2025] UKPC 34, which abolished the rule in Bermuda and England and Wales (discussed in our previous insight here).
Shareholders challenge the company’s privilege claim
The defendants (comprising a shareholder in the plaintiff and indirect investors and their officers) challenged the plaintiff’s claim to privilege over certain documents, arguing that Irish law entitles shareholders to the production of legal advice given to the company and that the shareholder company relationship is “one of a group of recognised joint interest relationships”.
The Privy Council’s decision in Jardine and its effect on Irish law
The High Court examined Jardine closely and summarised its key findings:
- a company and its shareholders each have distinct legal personality, as was established in the seminal case of Salomon v Salomon;
- the relationship of beneficiary and trustee, and shareholders and company are not analogous;
- the English decision in CAS (Nominees) Ltd and Others v Nottingham Forest plc and Others [1] was wrongly decided;
- there is no justification for a status-based automatic shareholder rule; and
- joint interest privilege does not apply to the company / shareholder relationship.
The High Court also considered Irish case law, including the decision in Carlo Tassara Assets Management S.A. v Éire Composites Teoranta & ors [2], which the defendants relied on as authority for the application of the shareholder rule in the case. That decision had found that a shareholder alleging oppressive conduct was entitled to disclosure of legal advice obtained by the company for the purpose of taking those actions, on the basis of a “joint interest” between shareholder, company, directors and management. The decision relied on English authorities, including CAS (Nominees), now undermined by Jardine.
While not bound by Jardine, Quinn J was not prepared to “treat Carlo Tassara as authority for a shareholder rule, in any formulation, without regard to the analysis of the Privy Council in Jardine.”
The court found the Jardine analysis “compelling”, noting that :
- company assets, including legal advice obtained, are the property of the company – while the shareholders benefit from the value of the company’s assets they are not joint or beneficial owners of those assets;
- a company acts via its directors – they are entitled to obtain legal advice; and
- where appropriate to share advice, directors can do so under joint privilege.
High Court conclusion – no automatic shareholder right to access legal advice
The court declined to go as far as saying that a shareholder could never access a company’s privileged legal advice (noting, for example, waiver) but was clear that shareholders do not have an automatic right to it. The court held that:
- the defendants had no right to inspect the plaintiff’s privileged advice unless the plaintiff had waived privilege (which the court found it had not); and
- there was no joint interest in that legal advice arising from either the shareholder / company relationship or the asserted duty of good faith owed under the shareholders’ agreement.
The decision does not affect a shareholder’s separate information rights. The court was clear that shareholders retain a proprietary interest in their shares and the rights attaching to them (such as the right to receive dividends, to participate in distributions on a solvent winding up, and to receive notice of and vote at meetings), and that rights to information are typically governed by a company’s constitution and any relevant shareholders’ agreement. The court also acknowledged that a board may, if it considers it to be in the company’s interests, choose to share privileged advice with shareholders on terms that establish a joint privilege, most likely by way of a formal agreement.
Practical implications for Irish companies and their boards
The decision protects legal advice from disclosure to shareholders, giving boards confidence to seek advice without concerns that it will be automatically accessible by shareholders, unless privilege has been waived or the board chooses to share the advice with shareholders under an agreed joint privilege arrangement. By aligning Irish law with the position in England and Wales and Bermuda post-Jardine, it brings greater certainty for companies, particularly those operating across those jurisdictions.
When negotiating shareholders’ agreements or constitutional documents, companies and their advisers should consider whether, and to what extent, minority or investor shareholders should be given express contractual or constitutional information rights, given that such express rights, rather than privilege, are the correct mechanism for shareholder oversight of a company’s affairs. Where a board does wish to share privileged advice with shareholders, this should be documented clearly (for example, by written agreement as to the scope and terms of the sharing) so that it is clear whether, and on what basis, privilege is being maintained or waived.
Although the issue did not arise for determination in this case, the court noted that there is a potential tension in maintaining privilege: a company that successfully protects its legal advice from disclosure to a shareholder may be limited in its ability to rely on that advice at trial to justify its actions. Companies should weigh the benefits of maintaining privilege against the value of being able to rely on the privileged material to support their position in the litigation. Legal advice should always be sought as the rules around privilege, including inadvertent waiver of privilege, are complex and must be carefully navigated.
For more information on the above, or for further guidance and insight in respect of shareholders and the application of joint interest privilege generally, please contact David Fitzgibbon, Karen Reynolds, Connor Cassidy, Aishlinn Gannon or your usual Matheson contact.
References
[1] [2001] 1 All ER 954
[2] [2016] IEHC 103
