In Lundin Mining Corp. v. Markowich, 2025 SCC 39, the Supreme Court of Canada (Supreme Court) provided notable guidance on the concept of “material change,” which sets the threshold for timely disclosure. The decision affirms that “change” must be understood flexibly and purposively, ensuring that disclosure obligations keep pace with real-world developments in an issuer’s operations.
Background
In October 2017, Lundin Mining Corporation’s (Lundin) Candelaria copper mine in Chile experienced two geotechnical incidents: first, the detection of localized pit wall instability, and six days later, a rockslide involving 600,000-700,000 tonnes of waste material. Both events were operationally significant enough to require evacuation and to affect access to an active mining phase, but there was no evidence of a site-wide shutdown.
Quantitatively, the rockslide represented about 0.8% of annual production (roughly three days of output), and deferred copper production accounted for less than 5% of Lundin’s projected global 2018 production. Lundin disclosed both events a month later in its annual operational outlook, together which included a reduction of production guidance by approximately 20%, prompting a 16% drop in its share price the following day.
The plaintiff sought leave to bring a statutory secondary-market claim under the Ontario Securities Act (Act) on the basis that Lundin failed to disclose “forthwith” a material change in its “business, operations or capital.” The Superior Court denied leave, holding that there was no reasonable possibility – based on a “plausible interpretation” of the Act and the available evidence – that the instability or the rockslide constituted a “change.” The motion judge interpreted “change” as requiring a shift in the issuer’s “position, course or direction” and concluded that Lundin continued to conduct the same business and fundamentally the same operations after the events, subject only to modifications.
The Ontario Court of Appeal reversed the decision. It held that the motion judge adopted an unduly narrow and categorical definition of “change,” improperly treating routine mining risks as incapable of meeting the statutory threshold and overly emphasizing the magnitude of the disruption. Accordingly, the plaintiff had demonstrated a reasonable possibility of establishing that the pit wall instability and rockslide constituted a change in Lundin’s operations.
Against this backdrop of diverging approaches to the definition of a “material change,” the Supreme Court was called upon to determine how broadly the statutory concept of “change in the business, operations or capital” should be understood, how magnitude and materiality should interact within this framework, and how rigorously motion judges should scrutinize contested evidence when investors seek leave to proceed with secondary-market claims. The majority of the Supreme Court sided with the Ontario Court of Appeal, with Côté J., dissenting.
Supreme Court majority decision
Distinction between “material fact” and “material change”
From the outset, the majority recognized that the appeal turned on one of the most challenging questions in securities law: distinguishing a “material fact” from a “material change.” It stressed that these concepts anchor the principle of proper disclosure, which is central to Canadian securities regulation and essential to maintaining a level playing field between issuers and investors.
In this context, the majority decision summarized the key rationales and principles regarding the concepts of “material fact” and “material change.” It observed that the distinction between the two concepts serves important legislative purposes. It serves to strike a balance between the burden that continuous disclosure places on issuers and the need for investors to be promptly informed of significant developments. Also, the requirement to disclose material changes “forthwith” plays a central role in reducing informational asymmetries between issuers and investors, thereby supporting fair and efficient capital markets.
To clarify the disclosure framework, the majority outlined two key guideposts distinguishing a “material fact” from a “material change.” A material fact is essentially static: it captures the issuer’s situation at a particular point in time. A material change, by contrast, is inherently dynamic, because it requires comparing the issuer’s affairs at two different points in time. The majority also emphasized that a material change tends to arise from developments internal to the issuer, whereas a material fact may concern either internal or external circumstances. Further, drawing on previous case law, the majority emphasized that negotiations and internal deliberations, without more, will not usually amount to a change in the business, operations or capital of the issuer, even if they are material.
Defining “material change”: guideposts
In light of these general principles, the majority examined the prior judgments and concluded that the motion judge had misinterpreted the concept of “material change.” It identified three principal errors, which serve as the foundation for the Supreme Court’s articulation of what constitutes a material change.
- “Material change” is a term that must be read broadly and contextually so as to accord with the purpose of continuous disclosure obligations, which is to level the informational playing field between issuers and investors. A flexible interpretation ensures that continuous disclosure obligations can apply across a broad range of circumstances, industries or corporate structures.
- The interpretation of “change” must remain grounded in the purpose of securities legislation, which is to mitigate informational asymmetries between issuers and investors. A purposive reading keeps the focus on that objective and avoids narrowing the concept through qualifiers such as “important” or “substantial,” which risk diverting attention from what the disclosure regime is designed to achieve. Thus, to be qualified as a change, an event need not be important or substantial.
- The terms “business, operations or capital” should be understood in their ordinary commercial sense. Their function is to direct the analysis to what matters in practical terms: how the issuer conducts its business, organizes and carries out its operations, and structures its capital. Viewed this way, the terms serve as a flexible and commercially grounded standard for identifying developments that may trigger timely disclosure.
For the majority, this broader interpretation, which the Supreme Court noted had been described as “investor-friendly,” promotes the fundamental purposes of the Act. It encourages issuers “to err on the side of disclosing new developments sooner rather than later.” Still, the majority emphasized that this interpretation of “change” does not convert every internal development into a disclosure event.
Materiality continues to function as the essential filter, requiring immediate disclosure only where a change could reasonably be expected to influence market value or investor decision-making. And in this respect, the majority did not alter the conventional definition of materiality, which is objectively determined from the perspective of a reasonable investor.
As the decision results from a motion for leave to pursue a statutory cause of action, the Supreme Court was not required to determine whether the pit wall instability and rockslide constituted a “material change.” Rather, the focus was whether the evidence showed that these events could have resulted in a “change.” The court must hear and determine on the substance of the matter if the two incidents which occurred at the Candelaria copper mine in October 2017 amounted to a material change.
Test for leave
The majority decision also provides notable comments with respect to the test for leave under the Act, which requires the court to be satisfied that “the action is being brought in good faith” and that “there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.” To meet this threshold, a plaintiff must namely “offer both a plausible analysis of the applicable legislative provisions, and some credible evidence in support of the claim.”
The majority decision criticized the decisions of both the Superior Court and the Ontario Court of Appeal, which equated the requirement that there be “a plausible analysis of the applicable legislative provisions” with “a plausible interpretation of those provisions.” In doing so, the lower court decisions suggested that statutory interpretation was conducted less stringently or in a more relaxed fashion on a motion for leave than at a trial on the merits.
The majority disagreed, stressing that the interpretation of the provisions at issue must still be correct and not merely plausible, and that “there must be a ‘plausible analysis,’ or a plausible application, of the relevant legislative provisions.” Further, it remarked that applying a less stringent standard to the interpretation of a statutory term at this stage of the proceedings would not promote the goal of preventing unmeritorious actions from proceeding to trial.
Overall, subject to the comment on plausible interpretation, the test developed by the Supreme Court in Theratechnologies inc. v. 121851 Canada inc., 2015 SCC 18, and reaffirmed in Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, remains unchanged.
Key takeaways
- “Change” is a broad and flexible concept. Assessing whether a change has occurred demands a dynamic, broad and integrated view of developments affecting an issuer’s business, operations or capital structure. As a result, issuers should review their disclosure controls and procedures to ensure that they can adequately consider developments on an ongoing basis. The practical implications of the majority decision as to the requirement to issue a press release may, however, be limited, as many public companies are subject to stock exchange requirements that require timely disclosure of material information, which consists of both material facts and material changes.
- Materiality is the critical filter. Under the majority’s framework, materiality becomes the key filter for timely disclosure, placing greater emphasis on the quality and consistency of an issuer’s disclosure record. The test for determining materiality remains unchanged.
- Statutory interpretation is not watered down on leave. The onus on the plaintiff seeking leave to offer a plausible analysis of the applicable legislative provisions does not amount to merely a plausible “interpretation” – the statutory interpretation must be correct, and the plaintiff must show a plausible analysis or “application” of those legislative provisions to the evidence on the leave motion.
This article originally appeared on Stikeman Elliott’s Knowledge Hub.
DISCLAIMER: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. Please read our full disclaimer at www.stikeman.com/legal-notice
**
Marc-André Coulombe is a partner in Stikeman Elliott’s Litigation & Dispute Resolution Group and a former member of the firm’s Partnership Board. His practice covers all facets of litigation, ranging from providing strategic advice to clients on litigious or potentially litigious issues to representing clients at trial and in appeal before the Quebec courts and the Federal Court of Canada.
Stéphanie Lapierre is a partner in Stikeman Elliott’s Litigation & Dispute Resolution Group and a member of the firm's Partnership Board. Her practice is mainly focused on securities, financial and business law. She represents clients both in the first instance and on appeal in matters involving hostile take-over bids, contested change of control transactions, shareholder disputes, derivative actions, plans of arrangement, dissidence rights and judicial liquidation.
Dan Murdoch is a partner in Stikeman Elliott’s Litigation & Dispute Resolution Group and a member of the Associates Committee in the Toronto office. He is also Chair of the Firm’s Claims & Risk Management Committee. His practice focuses on class actions and complex commercial litigation. His class action practice includes securities, product liability and professional negligence.
Stéphane Rousseau is an affiliated scholar and a full professor at the Université de Montréal’s Faculty of Law.