Craig Lockwood
Jan 19, 2024
Recapping 10 Canadian court decisions from 2023 with the most impact on businesses, Law360 Canada spoke to Osler Litigation partner Craig Lockwood about two sister cases that appeared at the Ontario Court of Appeal.
Markowich v. Lundin Mining Corporation, 2023 ONCA 359, and Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360, were the Court’s first exploration of the term “material change” within the context of the timely disclosure requirements of the Ontario Securities Act. That legislation defines it as “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.”
The Court laid out a two-step analysis for determining whether a material change has occurred: first, whether there has been a change in the issuer’s business, operations or capital; and second, whether that change was material, in the sense that it would be expected to have a significant impact on the value of the issuer’s shares.
“The upshot is that external circumstances that affect the issuer’s share price but do not affect its business, operations or capital do not qualify as a ‘change’,” explains Craig. “But also central to the analysis is an appreciation that the first step does not involve an assessment of the change’s magnitude or materiality, whereas the second step does.”
Despite the new test, the fact that what qualifies as a “change” is fact-specific — without its own “bright-line test” to determine that — can pose an issue.
“That’s especially true when trying to distinguish between a ‘material fact’ which must be disclosed in certain documents, like a prospectus, and a ‘material change’, which relates only to timely disclosure,” Craig says.
You can read the full article, “Top 10 business decisions of 2023,” on the Law360 Canada website.