Privilege And Shareholders’ Rights In Ireland

A recent decision of the Irish High Court (Court) addressed legal advice privilege as it applies between a company and its shareholders under Irish law.

The matter came before Mr Justice Michael Quinn, in Globoforce Group plc t/a Workhuman v Luxembourg Investment Company 276 SARL [2026] IEHC 397, in the context of the defendants’ application for inspection of documents in a discovery application, over which the plaintiff company claimed privilege. The decision addresses a question that remained unresolved under Irish law, namely, whether a company can assert legal advice privilege against a shareholder.

The decision is particularly notable as it follows a Privy Council decision in Jardine Strategic Limited v Oasis Investments II Master Fund Limited [2025] AC 1558 (Jardine), which held that the shareholder rule should not be recognised in England and Wales. The shareholder rule is commonly understood to mean that a company has no right to assert legal advice privilege against a shareholder.

Legal advice privilege

Legal advice privilege is a category of legal professional privilege (LPP). It protects a person from producing communications containing confidential legal advice made between it and its lawyers. A claim for LPP typically arises in the context of a discovery application, which is a pre-trial process in which the parties to the proceedings disclose all relevant documents to the other party.

In Globoforce, the defendants (who comprised the direct and indirect shareholders of the plaintiff company and certain directors of the shareholder entities) contended that under Irish law, company shareholders are prima facie entitled to the production of legal advice provided to the company. Their argument was grounded in what Quinn J described as a “status based” shareholder rule, under which a company cannot rely on legal advice privilege against a shareholder.

The Shareholder Rule

The rule traces its origins to a decision of the English High Court in Gouraud v Edison Gower Bell Telephone Co of Europe [1887] LJ CH 498, and which was followed and applied in later

UK decisions until its eventual overturning by the Privy Council in Jardine. The Privy Council found that the status based shareholder rule was unjustified, adding that “[l]ike the emperor wearing no clothes…it is time to recognise and declare that the rule is altogether unclothed”.

The basic premise for the shareholder rule was two-fold. Firstly, a shareholder, as a beneficial owner of the company’s property, paid for the legal advice and is therefore entitled to see it. This proprietary basis, derived from trust law analogies that treated shareholders as the beneficial owners of corporate assets, was found by the Privy Council in Jardine to be wholly inconsistent with the company’s separate legal personality, as established in the seminal Salomon v Salomon decision. Following Salomon, commentators and courts began to justify the shareholder rule by reference to a joint interest privilege, on the basis that shareholders and the company shared a joint interest in the subject matter of the legal advice obtained for the company’s benefit. However, the Privy Council in Jardine rejected the view that the company-shareholder relationship falls within the family of relationships to which the principle of joint interest privilege applies.

The arguments in Globoforce

In support of its application to inspect documents evidencing legal advice obtained by the plaintiff company, the defendant shareholders relied on the “shareholder rule”. They argued that the company-shareholder relationship fell within the group of recognised “joint interest” relationships to which joint interest privilege applies. To advance that position, they relied on an earlier Irish High Court decision in Carlo Tassara Assets Management SA v Eire Composites Teoranta [2016] IEHC 103, which, in the absence of clear Irish authority on the point, accepted in principle that legal advice obtained by a company could, in certain circumstances, be discoverable to a shareholder on a joint-interest basis. However, that decision was heavily influenced by English authorities and commentary which pre-dated and were subsequently reconsidered in Jardine.

The Court’s findings

While recognising the general obligation of the Court to follow previous High Court decisions (applying Re Worldport Ireland Limited [2005] IEHC 189), Quinn J held that it was permissible to depart from Carlo Tassara in this case, as it was decided with reference to English authorities, which the Privy Council in Jardine subsequently rejected. Although Jardine did not bind the Court, Quinn J was prepared to follow and apply it, being heavily persuaded by its finding of inconsistency between the shareholder rule and the rule in Salomon. Accordingly, the Court declined to treat Carlo Tassara as authority for any status based shareholder rule in Irish law.

The Court accepted that shareholders have a proprietary interest in their shares and the rights attaching to them, but held that they do not have a proprietary or beneficial interest in the company’s assets, including privileged legal advice obtained by the company. Therefore, the relationship between a shareholder and a company does not confer a right to inspect privileged legal advice obtained by the company.

The Court also rejected the argument that the relationship between a company and its shareholders gives rise to a joint or common interest in privileged legal advice. While shareholders clearly have a commercial interest in the company’s success, that interest does not translate into a “legally recognised common or joint interest in confidential legal advice obtained by the company itself, being a separate legal entity”.

The Court ultimately concluded that the direct shareholder, the indirect shareholders, and the directors of the shareholder companies were not entitled, by virtue of that status, to inspect the legal advice obtained by the plaintiff company.

Conclusion

By adopting the reasoning of the Privy Council in Jardine, Globoforce brings much-needed clarity to the relationship between legal advice privilege and shareholder information rights under Irish law. The ability of a company to obtain confidential legal advice, with confidence that privilege will be respected, is of obvious importance. Shareholders are not, however, left without information rights. They retain certain statutory rights, and where applicable, information rights may be conferred by a company’s constitution or a shareholders’ agreement. What they do not acquire is the right to inspect privileged legal advice simply by virtue of their status as members. In rejecting the shareholder rule, the Court has reaffirmed the fundamental principle that a company and its shareholders are separate legal persons.