Key Decisions Shaping Canadian Securities Litigation

Developments in Canadian securities litigation reflect an increasingly exacting environment. Recent Supreme Court of Canada (SCC) guidance on the meaning of a material change, increased judicial scrutiny of regulatory investigations, and growing divergence between Canadian and U.S. enforcement approaches all carry direct implications for disclosure governance and litigation risk.

The following five developments highlight evolving judicial and regulatory expectations shaping Canadian securities litigation.

1. Material Change Test. The SCC reaffirmed a two-stage framework for identifying a material change. Courts must first determine whether there has been any change in the issuer’s business, operations or capital, without regard to magnitude. Materiality is then assessed at the second stage. The SCC rejected qualitative thresholds at the first stage, confirming that the concept of “change” should be construed broadly and should not be narrowed by considerations of importance or disruption.
2. Disclosure Judgments. By declining to endorse a more precise test for the meaning of “change,” the SCC has introduced greater uncertainty into issuer disclosure assessments. Ordinary-course decisions, incremental transactions or responses to external events may now warrant closer scrutiny before moving to the materiality analysis. This underscores the importance of disciplined disclosure processes and contemporaneous documentation.
3. Judicial Scrutiny of Regulatory Investigations. Recent decisions reflect increased judicial oversight of securities regulators’ investigative powers. Courts have stressed that compelled production must be grounded in relevance and cannot amount to sweeping demands. While regulators retain broad authority, these decisions reinforce the centrality of proportionality and procedural fairness in enforcement proceedings.
4. Procedural Fairness. Recent appellate decisions signal a renewed focus on procedural fairness in securities regulatory investigations. Courts have emphasized that compelled production must be grounded in relevance and proportionality, and that some Charter protections continue to apply in administrative enforcement contexts. These decisions suggest increased scope to challenge overly broad investigative demands.
5. Cross-Border Divergence. Cross-border complexity continues to grow as Canadian and U.S. regulators pursue evolving and sometimes divergent enforcement priorities, such as in the areas of crypto-assets and climate disclosure. For dual-listed issuers, these differences complicate compliance, uniform North American disclosure and governance frameworks.

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