In addition to the requirements to provide shareholders with financial statements and MD&A, a reporting issuer must also inform its shareholders continuous of key developments in the business. This is usually accomplished by issuing a press release and, if material, then filing a material change report on SEDAR.
What is Material Information
Material information is generally considered to be all material facts and any material changes that affect an issuer.
A material change is defined to mean:
- 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, or
- a decision to implement a change referred to in item 1. made by the board of directors or other persons acting in a similar capacity or by senior management of the issuer who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable.
When an event is deemed to be a material change a press release must be issued immediately and then followed-up with a material change report.
A material fact when used in relation to securities issued or proposed to be issued, means a fact that would reasonably be expected to have a significant effect on the market price or value of the securities.
Review of Material News Releases
The CSE’s timely disclosure policy requires its issuers to provide a draft news release to IIROC’s market surveillance in advance of issuance if the news is deemed material. The policy also suggests that a reporting issuer should consult with IIROC on whether the news release discloses material information. Generally, a press release that is not material does not need to be reviewed by IIROC.
Temporary Trading Halt
Depending on when the material change occurs, if a press release is issued during trading hours, trading may be halted by IIROC to allow material information to be disseminated and allow market participants to decide if they want to change their buy or sell orders. The decision to halt trading is controlled by IIROC and not the CSE, and IIROC will not routinely halt trading for all press releases unless it is material. A trading halt by IIROC is normally very temporary – typically lasting less than two hours.
Material Change Reports
A reporting issuer must, as soon as practicable, and in any event within 10 days of the date on which the change occurs, file a Form 51-102F3 Material Change Report with respect to the material change.