The Supreme Court of Canada on Friday set aside a lower court’s interpretation that narrowly defined “material information,” which would have prevented the investors from bringing a class action against Lundin alleging that the company waited too long to tell them about the rockslide.
In 2017, Lundin detected pit wall instability in part of its open pit mine at its Candelaria copper mine in Chile. A few days later, on Oct. 31, as much as 700,000 metric tons of waste material fell in the mine. Lundin disclosed the event on Nov. 29, cutting its 2018 outlook for production at the location by 20%. The announcement caused Lundin’s stock to fall 16% the next day, erasing more than C$1 billion ($715 million) of market capitalization.
“The Supreme Court has upheld the guidance that it’s given public companies in the past, which is when something internal happens within your business and it’s something important to investors, you should disclose that immediately,” said Doug Sarro, assistant law professor at the University of Ottawa, in an interview.
“There’s been some commentary in the lead-up to the appeal trying to suggest that the status quo is you don’t disclose material changes unless they amount to, effectively, the end of your business,” Sarro said, whose analysis was cited in the court’s decision. “So it’s good that the Supreme Court has stepped in and corrected the record for everybody.”
Michael Thom, managing director of CFA Societies Canada, which intervened in the case, said the decision reinforces that companies know their own businesses best.
“This is good for investors, and this is good for markets,” he said. “It doesn’t take the law in a new or difficult-to-understand direction.”
A lawyer for Lundin Mining said the company would not be commenting on the decision.
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