In Lundin Mining Corp. v. Markowich,[1] the Supreme Court of Canada was presented with an opportunity to resolve one of the most persistent ambiguities in Canadian securities law: what does it mean for a development to constitute a change "in the business, operations or capital" of an issuer? These terms are not defined in securities legislation, regulatory instruments, policy statements, leading jurisprudence, or securities law textbooks. Lower courts have attempted to fill the void with various definitions, factors, and thresholds. Despite the clear need for conclusive guidance, the majority effectively declined the invitation.
The Court dismissed the dictionary definitions and thresholds used by lower courts. However, instead of interpreting the statutory terms, the Supreme Court restated settled law on factors not at issue, endorsed the Court of Appeal's seemingly tautological proposition that "a change is a change",[2] and insisted that “business”, “operations” and “capital” are well enough understood without further elaboration.
The result is a decision that purports to clarify the law while leaving its central question unanswered.
Background
The facts of Lundin are straightforward. Lundin Mining Corporation detected pit wall instability at its Candelaria copper mine in Chile on October 25, 2017, followed by a localized rockslide on October 31st. Lundin disclosed these developments approximately one month later as part of a regular operational update. The following day, Lundin’s share price dropped 16 percent. A shareholder sought leave to commence a secondary market class action for failure to make timely disclosure of a material change.
The central question was whether these events constituted a material change, that is, a “change in the business, operations or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer”.[3] This was not a case about materiality – no one challenged that if a change had occurred, there was a reasonable possibility the events could be shown at trial to be material.
Identifying the Issue
The Supreme Court framed the question broadly: what is the “distinction between a material fact and a material change”? As such, the Court drew upon extensive jurisprudence interpreting these terms. However, in doing so, the Court focused too much on distinguishing factors inapplicable on these facts, and missed a persistent area of residual overlap that has long called for judicial guidance.
To define this area of overlap, it is helpful to summarize the settled law on the difference between a material fact and a material change prior to Lundin.
There is no question that what constitutes a “material fact” is broader than a “material change”.[4] The Courts have made this clear through decisions defining what a material change is not. First, a material change cannot be an external event (although an external event might prompt an internal event that could be a material change).[5] Second, a material change must be dynamic, not static – a change involves comparing an issuer’s affairs at two points in time.[6] As Justice Perell held in Peters v. SNC-Lavalin Group Inc., a change cannot be “old news”.[7] A material change also cannot be merely a proposed or contingent course of action; in the case of negotiations, there must be a “substantial likelihood that the transaction would be completed”.[8]
But while these distinctions are settled law, they do little to address an area of stubborn ambiguity where material fact and material change intersect. Even though a material change cannot be external, it does not follow that all material facts are external. To the contrary, the Supreme Court has recognized that material facts can be internal to an issuer.[9] Similarly, while a material change cannot be static, it does not follow that material facts must be static. The two examples of internal material facts cited by the majority in Lundin are (1) a board decision to engage financial advisors for recapitalization, and (2) negotiating a material acquisition.[10] Both describe evolving situations and could be characterized as “new news”. The most famous example of a material fact – the unseasonably warm weather in Danier Leather[11] – is clearly external and therefore not a material change, but it would be odd to describe weather as anything other than dynamic.
The Court’s summary of the relevant principles leaves this area of overlap untouched.[12]
Perhaps the distinction is not that material facts themselves are static, but that their reporting occurs at specific, pre-defined intervals – through prospectuses, annual and quarterly financial statements, annual information forms, and information and proxy circulars.[13] These documents provide a static snapshot of an issuer’s affairs at a particular point in time, including both internal and external factors.
From this perspective, material facts are any material information existing at the time of a periodic report, and material changes are anything material and internal that, broadly speaking, ‘happens’ in between. As discussed below, the Supreme Court may not intend to go this far, though it is one possible interpretation, and possibly what animates Justice Côté’s minority decision.
However, this distinction does not follow from the text of the statute, which does not use the terms “internal” or “external”, and draws a distinction between material facts and material information. Nor does it accord with the balance intended between providing timely, accurate information without imposing an obligation “to provide running commentary on the company’s progress or to comment on internal or external events that may impact on the company’s performance”.[14]
The majority dismissed these concerns by pointing to the materiality component: since only material changes must be disclosed (i.e. those that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer), there can be no concern about an onslaught of reporting.
This argument ignores two features of the continuous disclosure framework. First, there is a difference in timing for disclosing material facts and material changes, even though both import an identical materiality assessment. If materiality is the only limit on the obligation to immediately report internal developments, this effectively collapses any distinction between internal material facts and material changes. There would be no material internal developments an issuer could wait to release until its next periodic filing. This risks undermining disclosure quality (some information is best assessed in the context of periodic financial evaluations) and creates a significant burden on issuers who must evaluate the materiality of these developments, whether they ultimately find them material or not. There is a wide continuum between trivial activities on the one hand and material events on the other. While the Courts are clear that issuers should err on the side of disclosure in borderline material cases, that still leaves a breadth of internal developments that, with proper analysis, may not be material or even borderline material.
Second, and more importantly, this argument ascribes no meaning to “in the business, operations or capital of the issuer”. The Court rejected dictionary definitions of these terms, as well as more threshold-like guidance. Qualifiers like “core”, “key” and “fundamental” were expressly rejected as questions of materiality.[15] Limiting material changes to those resulting from “key decisions taken by senior management” was not accepted.[16] Unsurprisingly, the most restrictive approaches – requiring a “significant disruption or interference” in the business or operations of a company, even rendering the issuer unable to carry on its principal business – were also rejected.[17]
Still, “in the business, operations or capital” was intended to mean something. The Supreme Court acknowledges this but declines to offer broadly applicable guidance, finding that “importing regulatory or judicial definitions for the intentionally undefined terms … would ossify the Securities Act”.[18] Instead, the Court offers that “business”, “operations” and “capital” are “widely understood commercial concepts”,[19] a contention undermined by persistent debate and confusion at the lower court level, and any relief issuers might have taken from their own commercial understanding of these concepts is immediately frustrated by the Court reaffirming that the business judgment rule does not apply here.
Filling the Gap
While holding that it is for the legislature and courts to set disclosure requirements,[20] neither the legislature nor the Supreme Court has yet defined what constitutes a change in the business, operations or capital of an issuer. However, this should not be taken as endorsing a maximalist approach to disclosure of all material internal developments.
The majority continued to endorse several exclusions not based on immateriality. In Theratechnologies, “routine” correspondence with a regulator and “routine steps” in a regulatory process were found not to constitute material changes.[21] The analysis turned not on materiality, but on the absence of any departure from the normal FDA process – and therefore the absence of a change in business, operations or capital. Thus, while the Court rejected qualifiers like “significant” and “major”, it implicitly approved the utility of “routine”. Similarly, the Court reaffirmed that developments not altering a known business risk could not constitute a change,[22] leaving a door open to find that while “a change is a change”,[23] not every development will be.
It is important to note that Lundin arose on a motion for leave to commence an action under the Securities Act. The test for leave requires only a “reasonable possibility” of success at trial. The majority is careful not to find that the wall instability or rockslide is a material change, or even a “change in the business, operations or capital of the issuer”. At this stage, it was enough that there appears to have been an “impact” on operations.[24] Whether that impact constitutes a material change is left for trial.
Defining “business, operations or capital” is likewise deferred. The Court held that the “statutory terms at issue acquire meaning by being applied in concrete factual circumstances”.[25] Therefore, issuers may not receive further guidance outside of the (rare) trial decision.
While this may be of little assistance to issuers seeking real-time clarity on their obligations, the fact that the pendulum on leave has swung in a plaintiff-friendly direction may result in further decisions on the merits, from which additional general principles may emerge.
[1] 2025 SCC 39 (“Lundin”).
[2] Lundin, at para. 64.
[3] Securities Act, R.S.O. 1990, C. S.5, s. 1.1.
[4] Lundin, at para. 96.
[5] Lundin, at para. 51.
[6] Lundin, at para. 48.
[7] 2021 ONSC 5021, at paras. 171-172, aff’d
[8] Lundin, at paras. 59-60.
[9] Lundin, at para. 55.
[10] Lundin, at para. 55.
[11] Kerr v. Danier Leather Inc., 2007 SCC 44.
[12] Lundin, at para. 96.
[13] Lundin, at para. 41.
[14] Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, at para. 28, aff’d 2014 ONCA 90, aff’d 2015 SCC 60.
[15] Lundin, at para. 77.
[16] Lundin, at para. 80.
[17] Lundin, at para. 79.
[18] Lundin, at para. 95.
[19] Lundin, at para. 92.
[20] Lundin, at para. 97.
[21] Lundin, at para. 61, citing Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18.
[22] Lundin, at para. 62, citing Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360.
[23] Lundin, at para. 64.
[24] Lundin, at para. 125.
[25] Lundin, at para. 6.
