A Material Change To The Meaning Of "Material Change"? – Practical Takeaways From The SCC's Decision In Lundin Mining Corp. v. Markowich

On November 28, 2025, the Supreme Court of Canada (SCC or the Court) released its decision in Lundin Mining Corp. v. Markowich addressing the distinction between "material facts" and "material changes."

In its majority decision, the SCC rejected narrow formulations of "material change" and emphasized a flexible, contextual interpretation that may expand the range of developments triggering immediate disclosure obligations for Canadian reporting issuers under securities laws. In particular, the Court confirmed that operational developments — not just strategic or structural shifts — may require disclosure "forthwith." Importantly, this decision does not alter the obligation of public companies to immediately disclose material information, including material changes and material facts, by way of press release under applicable stock exchange rules.

Background

The claim arose from operational events which took place at the Chilean copper mine of Lundin Mining Corporation (Lundin).

On October 25, 2017, Lundin detected pit wall instability at its Candelaria open pit mine. On October 31, 2017, the pit wall instability caused a localized rockslide in the open pit mine. The waste material that fell down a slope, approximately 0.8% of the mine's 2017 annual production, partially restricted access to the mine. No injuries, fatalities, or equipment damage resulted from the incident and, at the time, it was estimated that it would result in a delay of approximately 5% of Lundin's annual copper production.

Lundin warned investors of the risks of pit wall instability and rockslides on a periodic basis. However it did not publicly disclose the October 2017 developments until November 29, 2017, as part of a regularly scheduled press release with operational updates, where the company also announced that its copper production forecast for 2018 would be reduced by 20%. The following day, Lundin's share price declined by 16%, reducing its market capitalization by more than $1 billion.

An investor who acquired shares of Lundin between the October 2017 developments and the November 2017 disclosure, commenced a proceeding for leave to commence a class action against Lundin and several of its directors and officers. The investor alleged that each of the pit wall instability and rockslide was a "material change" for Lundin and should have been immediately disclosed under the timely disclosure requirements of the Securities Act (Ontario).

The Legal Issue: "Material Change" Versus "Material Fact"

Under Canadian securities laws, a "material change" is defined 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, whereas a "material fact" is a fact that would reasonably be expected to have a significant effect on the market price or value of the securities. Material facts need to be disclosed periodically, while material changes must be disclosed "forthwith" followed by the filing of a material change report within 10 days of the change.

The Lundin case turned on the appropriate interpretation of the statutory definition of "material change," and in particular, what constitutes "a change in the business, operations or capital" of the issuer, included in the "material change" definition. The central issue was what degree of an operational development can trigger immediate disclosure obligations under securities legislation.

Court Decisions

The Ontario Superior Court adopted a narrow approach, whereas the Ontario Court of Appeal (ONCA) overturned the trial court's decision, unanimously finding that the motion judge had adopted overly narrow definitions of the terms at issue.

The 8-1 majority of the SCC agreed with the ONCA, finding a reasonable possibility that the events could constitute material changes. Although the merits remain for trial, the SCC's interpretation of the statutory timely disclosure standard is binding and will guide how issuers assess whether developments require immediate disclosure.

Key Takeaways

The SCC's decision establishes several important principles for assessing timely disclosure obligations:

• Broad interpretation of "change": The Court held that the legislature intentionally left "change" undefined to ensure flexibility across diverse industries and corporate structures. It rejected approaches requiring that changes be "important," "substantial," or threaten an issuer's viability before triggering disclosure considerations. Further, the Court noted that importing dictionary meanings or requiring that developments be fundamental, core, high-level, or transformative before qualifying as "changes", and creating static and restrictive definitions of the widely understood concepts of "business", "operations", and "capital", in the absence of clear legislative intent, improperly narrows the statutory language and undermines the purpose of the timely disclosure regime. In general, "a change is a change".

• Two-step analysis must remain distinct: To determine whether a material change has occurred, issuers must first ask whether there has been a change in the business, operations or capital (a qualitative inquiry focused on the nature of the development), and only then assess whether that change would be reasonably expected to have a significant effect on the market price or value of the issuer's securities (a question of market impact). Magnitude and significance go to materiality, not to the threshold of whether there has been a "change." The majority held that two separate inquiries are needed as collapsing them risks overlooking developments that may appear operationally modest but could nonetheless have meaningful implications for investors.

• Flexible application of "business, operations or capital": These statutory terms are intentionally undefined and should be applied using their ordinary commercial sense and must be interpreted contextually, based on the specific facts and industry environment.

• Material change is issuer-centered: The Court affirmed that the concept of material change is confined to developments internal to the issuer. Purely external events, market conditions or industry news are not material changes unless and until they alter the issuer's business, operations or capital and the change is material.

• Informational asymmetry: The Court confirmed that a key purpose of continuous disclosure obligations is to reduce the informational asymmetry between issuers and investors. Although external developments are publicly observable and broadly digested, internal issuer-specific developments are not. Prompt disclosure of these material internal changes is therefore critical to address and mitigate this informational asymmetry.

Practical Guidance

Review and Update Disclosure Controls and Procedures

Canadian public companies should anticipate increased scrutiny of timely disclosure judgments arising from operational developments between periodic reports. The SCC decision warrants a prompt review of disclosure controls and procedures for Canadian public companies, particularly those governing the escalation of operational developments. Key updates may include:

• ensuring materiality assessment frameworks reflect the broader threshold for identifying "changes";
• expanding the range of operational events that must be escalated to the disclosure committee and legal counsel for review. Front-line operational teams should escalate events that alter how the business is being conducted;
• updating disclosure committee training materials and decision-making protocols; and
• enhancing documentation requirements for all disclosure determinations.

Operational developments at the facility or business-unit level — historically treated as routine or deferred to periodic reporting — should now be considered for timely disclosure review.

Strengthen Documentation Practices

Canadian public companies should ensure that materiality assessments and disclosure decisions are thoroughly documented, including:

• the information reviewed;
• the rationale for disclosure or non-disclosure;
• timing considerations; and
• any consultations with legal counsel.

Robust records will be critical if disclosure decisions are later challenged. Additionally, issuers should not rely on risk factor boilerplate. Prior disclosure of generic risks does not substitute for non-disclosure when those risks materialize in ways that amount to internal changes.

Implement Rapid Response Protocols

The "forthwith" requirement demands quick decision-making. Issuers should ensure:

• clear lines of communication between operational teams and disclosure committees;
• protocols for rapid convening of decision-makers; and
• processes for timely legal review where appropriate.

In particular, issuers should treat guidance updates as potential change events. If internal events necessitate revising guidance or operational plans, consider whether the underlying operational development is itself a "change" requiring timely disclosure, rather than waiting to incorporate the revision in periodic reporting.

Manage Context in Material Disclosures

Although the SCC decision supports a more expansive approach to identifying changes, issuers must balance competing risks: under-disclosure creates regulatory and litigation exposure, whereas premature or excessive disclosure may reveal competitively sensitive information, create market confusion, or inappropriately signal uncertainty or materiality around developing events.

The factual scenario of the Lundin case illustrates that bundling arguably non-material operational incidents with a clearly material disclosure can invite an inference of an internal change in business or operations. In Lundin's case, the reduction in production guidance was material; coupling it with references to pit wall instability and a rockslide, while omitting context that could otherwise explain the guidance change, enabled plaintiffs to argue they formed a sequence amounting to a material change. To minimize this risk, align context with the two-step framework: disclose the material development forthrightly, and if mentioning contemporaneous events, include balanced context to avoid implying the issuer effected a change in the issuer's business, operations or capital by that particular event unless that is, in fact, the case.

Developments That, On Their Own, Fall Outside the Definition of "Material Change"

While the SCC broadens the scope of developments that may amount to material changes, the Court confirmed that several categories of developments remain outside the statutory definition unless they give rise to an actual change within the issuer:

• External developments: Political, economic, or social changes external to the issuer do not constitute material changes unless they result in an actual change to the issuer's business, operations, or capital that would reasonably be expected to have a significant effect on the market price or value of the issuer's securities.

• Revenue fluctuations: Variations in financial results — without an underlying change in business, operations, or capital — remain material facts disclosed through periodic reporting, not material changes requiring immediate disclosure.

• Mere negotiations or internal deliberations: Preliminary negotiations, exploratory discussions, and internal deliberations generally do not amount to material changes until there is sufficient certainty that they will crystallize into an actual change.

• Status quo developments: Events that merely confirm existing circumstances or continue an issuer's existing operational trajectory do not constitute changes. Routine regulatory processes, confirmation of previously disclosed risks, or developments that maintain rather than alter the issuer's circumstances do not trigger immediate disclosure obligations.

Summary and Implications for Issuers

The SCC's decision clarifies the qualitative threshold for identifying "changes" in business, operations or capital, while preserving the distinct materiality assessment. Issuers must balance the risks of under-disclosure against the risks of premature or excessive disclosure. Managing these trade-offs requires disciplined judgment, robust internal processes, and comprehensive documentation of disclosure decisions. Although the decision does not alter stock exchange obligations to immediately disclose material information, it expands the circumstances in which a material change report may be required. In appropriate circumstances, issuers should consider confidential material change report filings, which allow temporary deferral of public disclosure where immediate disclosure would be unduly detrimental, while creating a contemporaneous record of the disclosure assessment. This option remains limited for cross-listed issuers given U.S. disclosure obligations.

In practical terms, disclosure committees will assess a higher volume of operational developments on compressed timelines, with heightened exposure if decisions are later challenged. Issuers should anticipate increased scrutiny of timely disclosure judgments, particularly regarding operational developments occurring between periodic reports. This necessitates stronger disclosure controls, appropriate resourcing of compliance functions and ready access to legal counsel. Issuers should work with their securities counsel to evaluate how the SCC's interpretation applies to their specific operations and to implement strategies tailored to their industry and risk profile.

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