Disclosure: Minority Oppression

The High Court of Justice of the Isle of Man handed down a judgment in the case of MIR LIMITED & OTHER v BADER & OTHER [2021] ORD 001 002 & 009 relating to disclosure in a minority shareholder oppression case.


This matter involved a contested application for specific disclosure made by Jens Bader, Venkatesa Prasannaa Muralidharan and Shanmuhanathan Thiagaraja (the “Applicants”) against Israel Rosenthal, MIR Limited (“MIR”) and MIR Limited UK Limited (“MIR UK”) (the “Respondents”).

The case focused on MIR, a company incorporated in the Isle of Man on 22 August 2016 which was the parent company of MIR UK, a company incorporated in England and Wales operating in the Fintech sector.

MIR developed an e-Wallet application known as “MuchBetter”. The development was an app acting as MIR’s main source of revenue enabling users to store, send and move money securely and quickly using a secure e-Wallet (the “App”).

Mr Rosenthal (“IR”) and the Applicants were the founders of MIR by an agreement dated 2 August 2016 (the “Agreement”). The Agreement stated that IR and the Applicants would be allocated 5% of the shareholding (“Founder Ownership Shares”) with the remaining 80% being allocated to IR (“Investor Shares”). In return for such allocation IR would invest US$5 million into MIR.

In summary, the dispute between the parties related to the dilution of shareholdings. The Applicants stated that their shareholdings would only be capable of dilution after at least US$10 million had been invested into MIR either by IR or external investors. On the other hand, IR argued that the shareholdings would not be diluted until at least US$5 million had been invested.

In November 2018 the Agreement was amended to reduce the Applicant’s salaries and increase the Founder Ownership Shares to 9% each. The Applicants stated that such amendment was agreed on the basis that IR, at that moment in time, had already invested more into MIR than initially planned. In September 2019, the Applicants stated that they discovered that IR had been making considerable loans to MIR which was concealed from the Applicants.

In July 2020, following the Applicants’ resignations one month prior, 9% of the shares in MIR were allotted to each of the Applicants. Shortly after, the Applicants’ shareholdings were reduced to 7.36% each. The reduction was based on IR’s reliance on a convertible loan agreement which entitled him to call for the allotment of 903,172 shares.

The loan agreement stated that MIR was valued at US$1.5 million which the Applicants claim is a gross undervalue of MIR which enabled IR to take 77.92% of MIR’s shares. On the other hand, the Respondents state that because MIR was sold for a proper price, the Applicants have not been prejudiced and their minority oppression claim has no substance. On this basis the Applicants sought an order for their shares be purchased at fair value and the previous allotment of shares be disregarded and set aside.

Legal Professional Privilege (“LPP”)

Definition: LPP is an umbrella term encompassing legal advice privilege and litigation privilege. LPP protects the confidentiality of written and oral communications between lawyers and clients. It is a fundamental right, entitling a party to withhold evidence from production to a third party or court.

Where privilege exists, it does not generally displace the obligation to disclose the document’s existence, it merely means the relevant document will not generally be produced to the other parties, the court and/or third parties, as appropriate.

Documents that are merely confidential, but not privileged, are not afforded such enhanced protection.


The Respondents submitted that advice obtained by MIR (regarding the loan agreements) was privileged from disclosure therefore, the Court had to consider its ability to order disclosure of documents containing or consisting of legal advice.

The Court stated that it is well recognised that a company may have litigation privilege in respect of communications referencing a dispute between the company and a shareholder. However, the company’s communications with its lawyers are not privileged as against the shareholder[1].

The Court referenced the case of Re Hydrosan Ltd [1991][2] , in which Harman J held that “matters passing between solicitors to a company and a company are prima facie entitled to be produced to all shareholder of the company”[3].

However, Harman J also stated that the above ruling does not apply where the company has brought action against a shareholder[4].

On this basis the Court highlighted that the law favours disclosure in minority oppression claims and is therefore reluctant to countenance objections on the grounds of privilege.


Definition: Standard disclosure requires a party to disclose only—

(a)     the documents on which he relies; and

(b)     the documents which—

(i)     adversely affect his own case;

(ii)     adversely affect another party’s case; or

(iii)     support another party’s case.

Part of the Applicant’s application requested an order requiring MIR to provide standard disclosure.

A consent order made prior to the transfer of the proceedings from the Chancery to the Ordinary Procedure, noted that MIR was not required to serve a Defence and need not take any part in these proceedings. Nonetheless, the Court held that such order did not detract from the obligation of MIR to provide disclosure, with Deemster Corlett noting:

“…As is apparent from my earlier citation of the relevant authorities it is well established that the company in question should provide disclosure, even though it may not otherwise take an active part in the proceedings…”

Deemster Corlett stated that the above matter was now a “matter of academic interest”[5] as MIR in April 2023 confirmed that it would give disclosure and produced a standard disclosure list. On this basis the Court concluded that no order was required on this part of the Applicant’s application alongside no order as to costs.

Esme Scott



The information and/or opinions contained in this article is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter. Any reliance on such information and/or opinions is therefore solely at the user’s own risk and DQ Advocates Limited (and its associates and subsidiaries) is not responsible for, and does not accept any responsibility or liability in connection with any action taken or reliance placed upon such content.


[1] Matthews and Malek, Disclosure (5th edition), 11.87

[2] Re Hydrosan Ltd [1991] BCC 19

[3] Re Hydrosan Ltd [1991] BCC 19, 21G – H

[4] Re Hydrosan Ltd [1991] BCC 19, 21B-C

[5] Mir Limited & Other v Bader & Other [2021] ORD 001 002 & 009, 11

About DQ

DQ is a leading Isle of Man based law firm with an international reach.

Recent Post