Reed Smith News Flashes

Further to Mr Justice Picken’s 27 November 2024 judgment in Aabar Holdings S.à.r.l. v. Glencore plc, which found that the so-called Shareholder Rule did not exist as a matter of English law, the claimant, Aabar, has now applied for permission to appeal directly to the Supreme Court for final determination of this important issue.

As addressed in our recent client alert The end of the “Shareholder Rule”?, the Shareholder Rule (until its rejection by Mr Justice Picken) prevented a company from claiming privilege against its own shareholders, thereby allowing shareholders to access company documents that would otherwise be protected by privilege (with the exception of documents arising from litigation between the shareholder and the company). Despite the Shareholder Rule having been referred to in recent decisions (including, on an obiter basis, by both the Court of Appeal and the Supreme Court), Mr Justice Picken found that it did not have a viable basis in English law. His decision built on the High Court decision of Various Claimants v. G4S PLC, addressed in our client alert on 1 December 2023, which questioned the applicability of the Shareholder Rule to the modern age of shareholding.

Given the significant ramifications for shareholders, it is not surprising that Aabar has sought to bypass the Court of Appeal and applied directly to the Supreme Court. If permission to appeal is granted, and the Supreme Court agrees with Mr Justice Picken, then shareholders will be deprived of a useful litigation tool that allowed them to access advice given to the company which could potentially support their claim. The overturning of the Shareholder Rule has particular implications on securities class action proceedings (such as Aabar) and unfair prejudice claims, although the overall scope of the Shareholder Rule is much wider.

We will continue to monitor these proceedings as they unfold.

Newsflash 2025-036