High Court confirms shareholder’s right to inspect privileged documents and clarifies its scope   

In this article, 4 New Square’s Shail Patel and Ed Grigg consider the High Court’s recent decision in Various Claimants v G4S [2023] EWHC 2863 (Ch), which concerns a company’s right to assert privilege against its own shareholders.


The High Court has confirmed the existence of the principle that a company cannot assert privilege against its shareholders except where it is claimed over documents which came into existence for the purpose of actual, contemplated or threatened proceedings against that shareholder (the “Shareholder Principle”).

The Shareholder Principle is based on longstanding Court of Appeal and High Court authority, and was most recently applied by Nugee J (as he then was) in the Lloyds / HBOS Litigation (Sharp v Blank [2015] EWHC 2681 (Ch)).

Although the Shareholder Principle was held to exist, the High Court considered that certain practical reasons militated against an order for disclosure in this case.


The issue arose in the context of a CMC in group securities litigation brought by institutional investors against G4S Ltd (previously G4S plc), the former FTSE-listed security services provider. The claims are made under s. 90A and Schedule 10A of the Financial Services and Markets Act 2000, which in broad terms enable shareholders to sue UK listed companies for publishing misleading information about their issued securities (or making dishonest omissions or delaying publication). The Claimants allege (among other things) that statements made by G4S were falsified by misconduct taking place within the company.

The position at the hearing was that three of the Claimants held their shares directly as registered shareholders (i.e. their names were entered in the company’s register of members), but the majority held interests in the securities through a chain of intermediated custody. As such, their shares were held in dematerialised form through the UK electronic settlement system, CREST. The decision of Mr Justice Hildyard in SL Claimants v Tesco [2019] EWHC 2858 (Ch) confirms that such shareholders have standing to bring claims under s. 90A.

A sub-set of the Claimants, comprising the three registered shareholders as well as those which held dematerialised securities, applied for disclosure of certain documents withheld and/or redacted by G4S and dating from the time of the misconduct described above. G4S refused disclosure on the grounds that the information was subject to legal professional privilege and that the Shareholder Principle was so dubious that it should not be applied. The application was brought under paragraphs 14, 17 and 19 of Practice Direction 57AD and in reliance on the Shareholder Principle.


Mr Justice Green accepted that, although it is “difficult to discern how the principle arose”, it had “clearly been recognised in a number of cases” (at [25]). He considered that it would “be bold and perhaps churlish of me to suggest that these are all misplaced” and that he could not say “that the principle does not exist or should be got rid of” (at [30]).

Having accepted the existence of the Shareholder Principle, the Court proceeded to clarify its scope. Mr Justice Green accepted that, in relation to matters of privilege, it was better to “err on the side of caution and preserve privilege unless there is a good reason not to” (at [38]). In light of his view, he held as follows:

  • The Shareholder Principle exists and applies to registered shareholders (at [43] and [47]).
  • The Shareholder Principle applies to shareholders that, as the Claimants submitted, held their shares at the time the documents came into existence (at [47]). Mr Justice Green rejected G4S’s argument that it should only apply to a shareholder that held its shares at the time the disclosure obligation arose or at the outset of proceedings.
  • The Shareholder Principle covers both types of legal professional privilege (legal advice privilege and litigation privilege) and not just the former as G4S submitted (at [48] and [50]). However, it does not apply to without prejudice privilege communications (at [49]).
  • The Shareholder Principle does not apply in respect of holders of interests in securities in dematerialised form. Mr Justice Green considered that the right is “an incidence to the legal ownership of the shares” such that he could not say that holders of a beneficial interest “are automatically entitled” to see the privileged material (at [42]-[43]). The Court did not consider itself bound by authority on this point and, as a result, refused to extend the principle.

Even though the High Court accepted the existence of the principle and clarified its scope, Mr Justice Green felt that it could not be applied to the registered shareholders in the case before him because of certain practical difficulties and in view of the pending trial, including potential differences between Claimants as to their respective rights of access to privileged documents.

Mr Justice Green did however consider that it may have been possible to make directions at an earlier CMC to deal with these practical issues (at [55]). The decision will, therefore, be instructive to claimants in other securities fraud actions. In those cases, the Court is likely to interrogate (a) when an application has been brought and (b) what practical steps could be taken to resolve potential difficulties (for example, the use of confidentiality clubs or split trials).

Shail Patel and Ed Grigg appeared for the Claimants along with Calum Mulderrig from 3 Verulam Buildings. A copy of the judgment can be found here.

If you would like more information please contact Dennis Peck or Jack Boggans.

Disclaimer: this article is not to be relied upon as legal advice.  The circumstances of each case differ and legal advice specific to the individual case should always be sought.

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Shail Patel KC

Call: 2006 Silk: 2024

Ed Grigg

Call: 2021



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