I'm a shareholder: can I see all the company documents?

Until now, the general approach has been that a company cannot claim privilege against its own shareholder, so that a shareholder is entitled to see otherwise confidential company documents – such as legal correspondence. However, in the recent landmark decision of Aabar Holdings SARL v Glencore PLC & Ors [2024] EWHC 3046 (Comm), the English High Court has overturned the century-old "Shareholder Rule," marking a significant shift in the law.

Background

The "Shareholder Rule" originated in the 19th century, allowing shareholders to access a company's privileged legal advice. This principle was based on the notion that shareholders, as contributors to the company's capital, had a proprietary interest in a company’s assets. However, in recent times, this rule has been increasingly because of the principle that a shareholder and a company are distinct legal entities.

Aabar Holdings S.á.r.l. brought a claim against Glencore Plc and several individuals under the Financial Services and Markets Act 2000. The central issue was whether Glencore could assert privilege against its shareholders.

The court ruled that the "Shareholder Rule" is unjustifiable and should no longer be applied.

Practical takeaways

1. Confidentiality. Companies can now maintain the confidentiality of their legal advice, even in respect of shareholders. Directors would do well to ensure that correspondence they are hoping to protect from shareholders is properly marked as privileged and confidential.
2. Know your rights. Just because the law has changed does not mean that a shareholder is not entitled to see any company documents. As a matter of law in the Companies Act 2006, a shareholder has a right to see a company’s annual accounts and reports, constitutional documents, register of members, resolutions and director’s employment contracts, and possibly more.
3. Shareholder and director relationships. Following this ruling, shareholders of large and public companies may wonder what documents they are entitled to see. We recommend that directors are transparent about this to prevent disputes arising. Larger companies should consider reviewing their policies concerning information which shareholders are entitled to.

If you are a shareholder and are in a dispute with a director concerning the approach the company is taking and your right to see documents, please contact our corporate disputes specialists Morgan Rees and George Gwynn. We routinely act in all manner of corporate disputes.