United Kingdom Data Accumulation | Absence of 'shareholder rule', gradual pricing, and artificial intelligence in advertising
Breaking News: Shareholder Rule Abolished in UK Law
In a landmark decision, the Privy Council has ruled that the "shareholder rule" must be abandoned, marking a significant shift in corporate law in England and Wales. The ruling, made in the case of Jardine v Oasis, sets a binding precedent for the country.
Under the abolished shareholder rule, shareholders had an automatic right to disclosure of a company's privileged documents. However, the Privy Council's decision confirms that legal professional privilege is a right of the company alone, not a shared entitlement with its shareholders.
The rationale that shareholders have an inherent proprietary interest entitling them to inspect privileged documents has been rejected as without justification. Instead, shareholder rights must be considered solely through corporate personality and contract law principles, not equity or joint interest privilege.
The decision protects the company’s ability to seek and receive confidential legal advice without risk of exposure to shareholder claimants. It may significantly affect shareholder litigation strategies, collective redress, and ESG-related activism by limiting shareholder access to internal legal communications.
However, ordinary rules on waiver and disclosure remain. If a company voluntarily discloses privileged documents in litigation, privilege related to those materials may be waived.
Upcoming Events
- On 10 September, a seminar titled "Products Unpacked" will cover changes to the product safety and compliance regime in the UK and EU.
- On 15 October, an event titled "When things go wrong: a legal survival guide" will focus on responding to common risk issues in business, including managing disgruntled investors, difficult board decisions, employee misconduct, fraud, early-stage litigation, and real estate problems.
- The event "Future of Infrastructure 2025" is scheduled for 24 September, featuring a panel of industry leaders discussing the development of the infrastructure sector over the next ten years.
Registration for these events is available online.
Legal Developments
- The Competition and Markets Authority (CMA) has provided further guidance on the 'drip pricing' provisions of the Digital Markets, Competition and Consumers Act 2024. The draft guidance offers numerous examples of prohibited practices. The deadline for consumer-facing businesses to respond to the CMA's consultation is 8 September.
- The Fraud, Asset Tracing and Enforcement Update includes updates on cross-border enforcement of judgments, fraudulent trading, account of profits, the English court's ability to grant freezing orders on third parties out of the jurisdiction, and a rare order for cross-examination on an interim application.
AI in Advertising: Proceed with Caution
While AI can offer benefits for advertising, businesses should be mindful of the legal and ethical considerations to avoid misleading consumers. Recent guidance provides practical tips for using AI responsibly in advertising and marketing.
[1] The Privy Council's decision: https://www.bailii.org/uk/cases/UKPC/2025/12.html [2] English High Court decision: https://www.bailii.org/ew/cases/EWHC/Comm/2024/3012.html [3] Draft guidance from the CMA: https://www.gov.uk/government/consultations/consultation-on-draft-guidance-on-drip-pricing-provisions-under-the-digital-markets-competition-and-consumers-act-2024 [4] Fraud, Asset Tracing and Enforcement Update: https://www.cms.law/en/publication/cms-fraud-asset-tracing-and-enforcement-update-july-2023
- The Privy Council's decision to abolish the shareholder rule represents a significant shift in corporate law, particularly pertaining to legal professional privilege and the rights of companies in England and Wales.
- As a consequence of the Privy Council's ruling, shareholders no longer have an automatic right to disclosure of a company's privileged documents, a shift that may significantly affect shareholder litigation strategies, collective redress, and ESG-related activism.
