Supreme Court of Canada Confirms Framework for Assessing a “Material Change”

In a decision released on November 28, 2025, the Supreme Court of Canada reaffirmed that the two-step test for a “material change” under Ontario’s Securities Act (Act) governs timely disclosure, and rejected a narrower standard as inconsistent with the Act’s text and scheme.

Factual Background

A minority shareholder of a reporting issuer commenced a claim under the secondary market provisions of the Act alleging that the issuer defendant failed to make timely disclosure of a “material change” in relation to a press release disclosing a pit-wall instability and rockslide at an open pit mine. The plaintiff sought leave to commence the claim under section 138.8(1) of the Act.

Lower Court Decisions

The motion judge denied leave, concluding that there was no reasonable possibility that the investor could establish that either the instability or rockslide resulted in a “different position, course or direction” for the issuer defendant’s business, operations or capital and therefore did not constitute a “change” within the meaning of the Act. In the motion judge’s view, pit-wall instability and rockslides were inherent risks in open-pit mining and did not affect the company’s overall viability.

The Court of Appeal for Ontario overturned the decision, holding that the motion judge adopted an unduly narrow understanding of “change.” Endorsing existing Supreme Court of Canada jurisprudence in Danier Leather and Theratechnologies, the Court of Appeal held that the material change analysis involves a two-stage inquiry: (1) whether there has been a change in the issuer’s business, operations or capital, assessed without regard to magnitude; and (2) whether any such change is material based on a reasonable investor standard.

Supreme Court of Canada Decision

Justice Jamal, writing for eight members of the Supreme Court of Canada, upheld the Court of Appeal’s decision and dismissed the appeal, affirming the above-noted two-stage inquiry and its proper application to the record on leave. The Majority made the following key observations and findings:

• Meaning of “Change”: The majority rejected the motion judge’s narrow interpretation of “change,” “business,” “operations,” and “capital”, emphasizing that the legislature intentionally left these open-ended so they can take their meaning from varied factual contexts. Imposing narrow thresholds would undermine the statute’s purpose of reducing informational asymmetry through timely disclosure.

The majority confirmed that “change” must be given its ordinary, contextual meaning and does not require that a development be fundamental, transformative or structural; questions of significance belong to the second stage — materiality — not to the threshold inquiry of whether a change has occurred.

• Material Facts versus Material Changes: The majority reinforced the foundational distinction between material facts and material changes. A material fact concerns external or internal information about the issuer at a single point in time and is addressed through continuous disclosure obligations. By contrast, a material change must be internal to the issuer and involves an alteration between two points in time that must be disclosed “forthwith.” The majority noted that the two-stage test helps to preserve this critical distinction.
• The Leave Test: The majority clarified that the plaintiff must establish a reasonable or realistic chance, and not merely a possibility, that the action will succeed at trial, based on a plausible analysis of the applicable statutory provision and some credible evidence in support of the claim. The majority clarified, however, that a plausible analysis must still rest on a correct — rather than merely arguable — understanding of the statutory scheme.

Applying its articulation of the two-stage inquiry and test for leave, the majority found that the above-noted incident’s operational impacts, even if temporary and arising in a high-risk mining environment, were sufficient to plausibly constitute a change in the issuer defendant’s operations under the first stage. As no party disputed that materiality could plausibly be shown at trial, the second stage of the “material change” test had also been established, and leave had been properly granted.

In dissent, Justice Côté would have allowed the appeal, finding that only core or high-level changes in a company’s business, operations or capital can qualify as “changes.” In her view, the majority’s interpretation blurred the distinction between material facts and material changes and expanded reporting issuers’ disclosure obligations too far.

Conclusion

The Supreme Court has confirmed the continued application of the established two-stage framework for assessing material changes under the Act and its analogous provincial counterparts, declining to endorse a narrow or precise interpretation of “material change.” The Court has also clarified the evidentiary and analytical requirements at the leave stage.

Issuers should consider this guidance carefully when assessing their disclosure obligations. In particular, the broad, contextual approach endorsed by the Court underscores the importance of exercising caution in material change determinations and grounding those assessments in the specific facts and circumstances of a given event. The decision will also inform the approach issuers take to defending statutory secondary market claims alleging a failure to make timely disclosure.

For more information, please contact the authors or any other member of our Securities Litigation or Capital Markets groups.