Shareholders will no longer be entitled to view a company’s legal advice in disputes over mergers after a landmark ruling in a Bermuda case by Britain’s highest court.

On July 24, the Judicial Committee of the Privy Council sided with Jardine Strategic Ltd in its long-running dispute with 81 former shareholders, overturning decisions by the Bermuda Supreme Court and the Bermuda Court of Appeal.

The case stems from Jardine Matheson’s 2021 merger, which cancelled all shares in Jardine Strategic and offered minority shareholders approximately $33 per share. Many of those shareholders filed claims under Bermuda law seeking a higher payout, and asked to see legal advice the company had obtained about the transaction.

The Privy Council ruled that those documents are protected by legal professional privilege. In doing so, it rejected what is known as the “shareholder rule", which had allowed certain legal exceptions for shareholders in earlier court decisions.

In its written decision, the court stated: “The board is satisfied that the shareholder rule forms no part of the law of Bermuda, and that it ought not to continue to be recognised in England and Wales either. It is like an emperor who has worn no clothes, and it is time that was acknowledged.”

Jardine Strategic now does not have to disclose any internal legal advice from before the 2021 vote, potentially weakening the shareholders’ case for a better price.