The Supreme Court of Canada’s decision in Lundin Mining Corp. v. Markowich marks an important shift in how issuers should think about timely disclosure. In an 8–1 ruling, the Court rejected a narrow reading of what counts as a “material change,” favouring a broader, more flexible context-sensitive standard. For investor relations (IR) professionals, this means internal developments may need to be disclosed sooner than in the past.
What happened in Lundin
The case stems from two events at Lundin Mining’s Candelaria mine in Chile in late 2017. After pit wall instability was detected on October 25, a substantial rockslide occurred on October 31, restricting access to part of the mine. No injuries or equipment damage were reported, but operations were clearly affected.
Lundin did not disclose the events at the time they occurred. Instead, it reported them a month later in a routine operational update, at which point it also reduced its next-year copper production forecast by 20%. The company’s stock fell 16% following that release, erasing more than $1 billion in market value.
An investor who purchased shares after the rockslide, but before the routine update, sought leave to bring a class action, arguing that these developments ought to have been disclosed immediately as material changes. While the motion judge rejected the claim, the Court of Appeal disagreed, and the Supreme Court has now upheld that broader view.
A more flexible understanding of "change"
The Supreme Court emphasized that the Ontario Securities Act intentionally leaves terms like “business,” “operations,” and “capital” undefined. That flexibility, the Court said, is deliberate. It allows the statute to apply across industries and business models. A rigid or technical definition would undermine that purpose.
Crucially, the Court did not decide whether a material change occurred in Lundin’s case. It simply found a reasonable basis for the class action claim to proceed. In doing so, the Court reinforced a more expansive view of what could constitute a “change” for the purposes of disclosure and confirmed that such determinations must be made early—often before the full impact is known.
What this means in practice for IR teams
The decision has several practical effects for issuers:
- The bar for identifying a "change" is now lower. Commentary on the ruling notes that companies and securities lawyers had hoped for a more restrictive definition. Instead, the Court confirmed a broader approach, making it more likely that operational developments will be viewed as potential changes that require fast assessment.
- The path to class actions is smoother. Because the Court reinforced a relatively accessible leave test, investors may find it easier to launch secondary-market claims when disclosure is delayed.
- Issuers may disclose earlier and more frequently. Given the increased litigation risk, companies that are undecided about whether an event constitutes a material change may lean toward disclosure "out of an abundance of caution."
- Materiality assessments will demand closer attention. The Court reiterated the two-step test:
- first, determine whether there has been a change in business, operations, or capital;
- then, assess whether that change is material. Importantly, the significance of an event is not part of the first step. Magnitude comes into play only once a change is identified.
What IR teams should do now
The implications for day-to-day IR work are clear:
Escalate issues earlier. More situations may need to be treated as potential material changes. While not every development will require disclosure, early escalation to senior management enables informed, timely decisions.
Reinforce your internal processes. Timely disclosure requires quick coordination across IR, legal, finance, and operations. To achieve this, IR teams should be fully integrated with their companies' operational and finance functions so they can be aware of potential material events when they occur and serve as an ongoing resource.
Be prepared for more real-time judgment calls. Without bright-line rules, context and common sense matter more than ever. Materiality can often be a point of debate, as disclosure rules can be vague. We have found the “reasonable person” model cited in the Québec Securities Act to be helpful: would the event be important to a reasonable investor considering buying or holding the company’s shares?
Adopt a cautious mindset. A delay that later appears unjustified can create legal exposure and reputational risk. At the same time, companies should avoid over-disclosure, in which all events are announced, and investors are left to discern their materiality. Here, a detailed disclosure policy should be in place to serve as a guide.
The takeaway
The Lundin decision does not rewrite the disclosure rules, but it does sharpen expectations. The Court’s message echoes long-standing securities principles: disclosure is central to investor protection, and companies must act promptly when internal developments could affect the market.
In this environment of heightened scrutiny, proactive and well-documented disclosure processes are more than best practice; they are essential. IR professionals will play a central role in ensuring that material developments are assessed carefully and disclosed in a timely, responsible manner.
