High Court Decision Underlines Need For Investor-appointed Directors To Think Carefully Before Disclosing The Company's Privileged Material

The decision suggests such directors should not disclose the company's privileged material to their appointing investor unless that is in the company's interests and is expressly authorised. 

The High Court has held that privilege was waived where a company's solicitors sent its (presumed) privileged material to its shareholders' solicitors in the course of a dispute between them. However, privilege had not been waived where the company's privileged material was provided to a director appointed by the shareholders under the terms of a shareholders' agreement: IDCV CU FT3 K/S v Curve OS Group Ltd [2026] EWHC 2024 (Ch). 

The decision has significant implications for investor-appointed directors and the companies on whose boards they sit. It suggests that, even where a shareholders' agreement contains broad information-sharing rights, those rights will not readily be construed as extending to the company's privileged material. 

Accordingly, where parties intend such information-sharing rights to include privileged material, they may be well advised to spell that out. Absent clear wording to the contrary, the decision suggests that an investor director will be under a duty to protect the company's privilege, and should not disclose privileged material to their appointing investor unless that is clearly in the interests of the company and they are clearly authorised to do so by the company (usually acting by its board). 

The decision also recognises that it is possible to waive privilege only for a limited purpose, so that the recipient of the privileged material is not entitled to use it for other purposes (described in the judgment as a "limited waiver", though that term is more commonly used to describe a situation where privilege is waived against particular parties, without loss of privilege against the rest of the world). The decision emphasises, however, that the limited purpose must be clear to the recipient at the time of disclosure, and there must be some commonality of interests between the parties. A limited waiver of this sort was found to exist, for example, in Berezovsky v Hine [2011] EWCA Civ 1089 (considered here).

Background

The issue arose in the context of an unfair prejudice petition brought against Kerem Naboth Ltd (formerly Curve OS Group Ltd) (the "Company") under s.994 of the Companies Act 2006. The Company brought an application to resolve the question of whether any privilege had been waived in documents of the Company that were in the possession of the petitioners. The question of whether the documents were in fact privileged was in dispute, but the court proceeded on the assumption that privilege applied subject to the question of waiver.

The petitioners were a venture capital fund that had a shareholding in the company. Under a Subscription and Shareholders Agreement (SSA) with the Company, the petitioners were entitled to appoint an "investor director" to the Company. Its appointed director was a Mr Aitkenhead, who was also managing director of one of the companies comprising the petitioners. 

The documents which were the subject of the application included:

• Class 1 documents, which had been provided by the Company's solicitors to the petitioners' solicitors.
• Class 2 documents, which had been provided by the Company to Mr Aitkenhead while he was a director of the Company.  

Decision

In an ex tempore decision, the High Court (Marcus Smith J) held that any privilege had been waived in the Class 1 documents but not the Class 2 documents.

The principles

The court noted that, following the Privy Council's decision in Jardine v Oasis [2025] UKPC 34 (considered here), which abolished the so-called Shareholder Rule (ie that a company could not generally assert privilege against its direct shareholders), it was clear that – subject to waiver – the Company was entitled to assert privilege against its shareholders including the petitioners.

It was also clear that the disclosure of privileged material to a director, in that capacity, did not affect the privilege. To the extent that Mr Aitkenhead received the Company's privileged material as a director, including as investor director, he did so as the Company's agent and had a duty to protect the Company's privilege, unless the Company itself had given him clear authority to waive the privilege.

Turning to the question of waiver, the court commented that, given the fundamental nature of privilege, it should not easily be lost. In particular, an accidental loss of privilege is to be avoided, if at all possible. Where there is said to be a waiver, the court should look at all the circumstances and construe them objectively to see whether there had been a waiver, ie whether the right to assert the privilege had been abandoned. The most obvious case of waiver is where a party deploys its privileged material to further its claim against another party. In such a case, the other side would be entitled to use the material for its own purposes. 

The court noted that it is also possible to waive privilege only for a limited purpose, without waiving privilege more generally against the recipient of the privileged material. For such a limited waiver to be sustainable, the court said, the limited purpose would have to be objectively clear to the recipient at the time of disclosure and there would need to be an "absence of opposing interests" between the parties. This would not need to go so far as to amount to common interest privilege, but it would require some commonality. As the court explained:

"Take, for instance, the case where the holder of LPP chooses to deploy LPP material for its own purposes, to its own advantage in furthering its claim against someone else. The privilege cannot be maintained for that limited purpose, even if the disclosing party, the holder of LPP, says in turns, 'I am disclosing this to you to do you down. The only purpose for which this material may be used is that'."

Separately, the court noted, it is possible to waive privilege entirely against a given recipient, but for the material in question nevertheless to remain confidential against other parties. 

Application to the facts

Class 1 documents: The court held that privilege in this class of documents had been waived, as they had been sent by the Company's solicitors to the petitioners' solicitors in what was plainly a litigation environment. 

Any waiver was only in relation to the particular documents disclosed. However, as well as documents attached to the communications between the Company's solicitors and the petitioners' solicitors, the waiver would also apply to documents referred to by the Company's solicitors as being in the possession of Mr Aitkenhead, where those documents were clearly identifiable and there was clear authorisation for Mr Aitkenhead to disclose them to the petitioners. The court commented that ordinarily one would expect – and for his own protection, Mr Aitkenhead ought to require – "explicit and direct authority" from the Company to disclose its privileged material to a third party.

The court rejected the Company's argument that any waiver was a limited one. The communications from the Company's solicitors did not show a sufficiently clear limit on use of the information. The parties were obviously in opposition to each other and it was very difficult to frame what the limited purpose might have been. And the disclosures were made between opposing solicitors in circumstances where the normal expectations of litigation conduct should prevail – ie that a solicitor is normally entitled to assume that any privilege is waived where documents are provided for disclosure and inspection in the course of litigation (save in cases of fraud or obvious mistake).

Class 2 documents: The court held that privilege in this class of documents had not been waived. A critical question was whether Mr Aitkenhead received the documents as the agent of the petitioners under the SSA or as a director of the Company. 

The court regarded the fact that some of the documents had been sent to Mr Aitkenhead at an email address on the petitioners' server, and were therefore (at least in theory) accessible by the petitioners without Mr Aitkenhead's knowledge or consent, as "almost wholly irrelevant". The Company could email Mr Aitkenhead at a non-Company email address, including one controlled by the petitioners, without waiving privilege.

The SSA contained various provisions entitling investors to information, including budget and cash flow forecasts, financial statements, and other information reasonable required for certain purposes specified in the agreement. There was however no express entitlement for the investors to demand  privileged information and, the court said, it would be "a bold reading of the SSA" to construe it as conferring such an entitlement. As privilege is a fundamental and absolute right, the court said, one would expect the SSA to say in express terms if the investors' entitlement to Company information included not only confidential but also privileged information.

In this case, clause 8.15 of the SSA provided that a party who had appointed an investor director must procure that they complied with clause 16 (Confidentiality), save that they: 

"shall be at liberty from time to time to make full disclosure to its appointing party… of any information relating to the Company…, unless the Board has determined in good faith that the disclosure of the information… would conflict with the Company’s interest". 

While this clause appeared to enable the investor director to disclose any of the Company's information to the petitioners, including privileged material, the court said that would "oversimplify what is a rather more complex legal environment". In particular, the SSA could not, and did not purport to, derogate from the investor directors' duties owed to the Company as directors, which included protecting the Company's privilege (unless the Company had made a decision to waive privilege). 

Accordingly, the court concluded that the class 2 documents came to Mr Aitkenhead in his capacity as director of the Company, and not as agent for the petitioners. Mr Aitkenhead was not entitled to disclose the Company's privileged material unless that was consistent with his duty to the Company and the Company expressly authorised him to do so. There was no indication of any such authority.