According to information, let’s remind Ontario Securities Act (“LVMO”), a material fact is one that is expected to have a material effect on the value of the securities. As a general rule, disclosure of a material fact is not required for a statement to be non-misleading, or disclosure of a material fact need not be made unless it is necessary. Failure to disclose a material fact in these cases constitutes a misrepresentation of the facts, which attracts the issuer’s liability for disclosure obligations in the secondary market.2
In case wong, a group of shareholders of Pretium Resources Inc. (“Pretium”), represented by Mr. Wong, alleged that Pretium, a gold mining company, and its CEO failed to disclose a material fact, or rather an adverse opinion, that it presented at the time. Strathcona Mineral Services Ltd. (“Strathcona”) Pretium mineral resource evaluation.
Pretium had engaged Strathcona to oversee the bulk sampling program. This example was to be used by Snowden Mining Industry Consultants Ltd. (“Snowden”), a reputable mining consultant engaged by Pretium in connection with the verification of the accuracy of resource estimates. Strathcona expressed concerns about the resource estimate, based on analysis of samples processed at the sample tower and before the entire bulk sample was drilled, crushed and tested, and called on Pretium to disclose this opinion.
In court, judge Belobaba, while evaluating the criterion of significance (“ materiality in English), considered the objective validity of Strathcona’s opinion. Judge Belobaba concluded that Strathcona’s concern lacked merit because it had made fundamental errors in its analysis. Thus, the judge determined that there was no duty to disclose this invalid opinion, and the defendants’ motion for a light sentence was granted.
On appeal, Mr. Wong argues that the judge erred in considering the objective credibility of the opinion when assessing materiality. Judge van Rensburg, for the Court of Appeal, held that there was no error in this regard: although the reliability of the information withheld or omitted is not necessarily relevant to the assessment of the materiality criterion in any case, it is the issue.
Indeed, the circumstances in this case, and more specifically, Strathcona’s premature and out-of-the-way concerns, leave the door open for the judge to consider the quality or reliability of the information released. In other words, information, not in case wong, undisputed facts, but an opinion to the contrary. Pretium’s decision not to disclose this opinion was not a business issue; rather, it was an objective assessment of the accuracy of the opinion as well as the current state of the disclosure. In addition, Pretium announced that it will announce the results of the batch selection after receiving and analyzing all the data. No one expected an explanation along the way. The issuer is not required to disclose all information at its disposal, regardless of its reliability and importance. A reasonable investor would want to know whether the opinion is objectively reliable; Without this objective validity, an opinion is not a material fact.
Justice van Rensburg is clear: to determine the importance of such an opinion to a reasonable investor, it was necessary to consider, among other things, its objective reliability. Moreover, he believes that this idea could have been revealed deceitful because the opinion is expressed on the basis of incomplete information. He adds that disclosure of facts that the judge deemed objectively unreliable would not benefit the “reasonable investor” but would result in the market turmoil that LVMO’s disclosure obligations seek to avoid. »3
Thus, the appeal is dismissed.
1 – 2022 ONCA 549.
2 – Pure and simple omission of a material fact in Quebec constitutes false information and deceitful.
3 – Our translation.
It was written with the cooperation of M.e Kevin Pinkoski and Ariel Parienti, articling student.
This article is not legal advice.