Shareholder rights and privilege

28/07/25

Jardine Strategic Holdings Ltd (“Jardine”) was a company incorporated in Bermuda and a holding company for the multinational Jardine Matheson group. Approximately 85% of its shares were owned by another company in its corporate group, Jardine Matheson Holdings Limited (“Jardine Matheson”). The remaining 15% of its shares were publicly traded. In March 2021, Jardine announced an intention to enter into corporate reorganisation by way of amalgamation which, in essence, involved the publicly traded 15% of its shares being cancelled in return for a payment of US$33 per share. A number of shareholders considered the US$33 per share payment to be too low and dissented from the proposal, which was nevertheless passed due to the votes of Jardine Matheson itself. The dissenting shareholders commenced appraisal proceedings under s.106 of the Bermuda Companies Act 1981 asking the Court to appraise (and require Jardine to pay them) the “fair value” of their shares.

On 24 July 2025 the Privy Council delivered two important judgments arising out of interlocutory applications in the dispute.

The first, Jardine Strategic Ltd v Oasis Investments Master Fund Ltd (No.1) [2025] UKPC 33, involved an application for summary judgment made by Jardine against a number of shareholders who had acquired shares in the period between announcement of the proposed amalgamation and the date of the meeting at which it was approved. Jardine contended that those shareholders were not entitled to exercise the statutory appraisal right in s.106, which instead protected only ‘long term’ shareholders (i.e. those who had held shares before the amalgamation was announced). The Privy Council upheld the decisions of the Chief Justice and Court of Appeal in Bermuda dismissing that application, holding that the right to seek an appraisal of the fair value of shares is available to all those who are shareholders at the date of the meeting at which the amalgamation is approved, and that “fair value” is to be determined on an objective basis that is not affected by matters such as the date on which a shareholder acquired its shares or its motives in doing so.

The second, Jardine Strategic Ltd v Oasis Investments Master Fund Ltd (No.2) [2025] UKPC 34, concerned an application by the dissenting shareholders for disclosure of legal advice that Jardine had received in connection with its determination of the US$33 per share figure. The Chief Justice and Court of Appeal had granted that application on the basis that Jardine could not assert legal professional privilege against its own shareholders in that advice because they had a “joint interest” in it. The Privy Council overturned that decision, holding that the interests of the company and of the shareholders were not aligned in connection with the exercise of determining the value of the shares. More broadly, the Privy Council took the opportunity to consider the longstanding principle of English law that companies generally cannot claim legal advice privilege against their shareholders (described in the judgment as the ‘shareholder rule’). The Privy Council held that no such principle exists, having initially been based on an analogy with the relationship between trustees and beneficiaries that could not stand in light of the recognition of the separate legal personality of companies, and more recently having been said to arise out of a joint interest that does not accurately reflect the relationship between a company and its shareholders. The Board made a Willers v Joyce direction, indicating that its decision that the shareholder rule does not exist, though made in an appeal from Bermuda, should be regarded as representing English law.