knowledge 30 June 2026 |

‘Shareholder Rule’ abolished

The High Court’s decision in Globoforce Group Plc, trading as Workhuman v Luxembourg Investment Company 276 SARL & Others [2026] IEHC 397 clarifies the Irish law position with regard to the so-called ‘shareholder rule’, confirming that a company may assert legal advice privilege against its own shareholders.  The decision follows the UK Privy Council decision in Jardine Strategic Ltd thereby increasing alignment between the two jurisdictions on shareholder access to company legal advice – a decision of particular significance for multinational groups operating across both jurisdictions.

As McCann FitzGerald LLP acted for the plaintiff, Globoforce Group Plc in the application, we share our unique insights below.

The decision in Globoforce Group Plc, trading as Workhuman v Luxembourg Investment Company 276 SARL & Others

An application was brought by the defendants in these proceedings challenging claims to privilege made by the plaintiff in respect of certain documents discovered, and seeking further and better discovery of other documents.  The defendants submitted that as a matter of Irish law the shareholders of a company are prima facie entitled to the production of legal advice provided to the company – the so-called ‘shareholder rule’.

Historically, the ‘shareholder rule’ originated with the decision of the Privy Council (Chitty J.) in Gourand v. Edison Gower Bell Telephone Co. of Europe [1887] 57 LJ CH 498, which was decided on the basis that there was an analogy between the relationship of company and shareholders and the relationship between beneficiaries and a trustee, and that shareholders could be said to be the beneficial owners of the property of the company.  However, Quinn J found, in line with the Privy Council decision in Jardine Strategic Ltd, that there is no parallel between the relationships of beneficiary and trustee and shareholders and a company and further that this justification was inconsistent with the House of Lords decision in Salomon v Salomon [1897] AC 22, which recognised that a company is both legal and beneficial owner of its property.

Quinn J. also found, again in line with Jardine Strategic Ltd, that the alternative justification for the rule, based on the supposed joint interest between a company and its shareholders relating to the affairs of the company, could not sensibly justify an automatic denial of privilege between every company and its shareholders since there will not always be a community of interest between them. In essence, Quinn J found that the relationship of company and shareholder does not fall within the family of relationships to which the principle of joint interest privilege applies.

What does the decision mean?

This decision, which relates specifically to legal advice privilege, confirms that privilege over legal advice belongs to the company itself, not to its shareholders. A shareholder cannot, simply by virtue of its shareholding, claim an inherent right to override that privilege. As a result, company representatives may seek legal advice secure in the knowledge that legal advice privilege will hold against shareholders, unless waived. 

Conclusion

This decision confirms that unless a shareholder has a specific contractual or constitutional right to review privileged documents, legal advice obtained by boards in relation to for example, corporate transactions, regulatory matters, shareholder disputes, or governance decisions is robustly protected from shareholder scrutiny. The decision aligns the Irish position with the position in the UK, which provides, in particular for multinational organisations, coherence of approach across both jurisdictions.