(1) Securities legislation permits a company to delay disclosure of a material change and to keep it confidential temporarily where immediate release of the information would be unduly detrimental to the company’s interests. [FN 2] For example, immediate disclosure might interfere with a company’s pursuit of a specific objective or strategy, with ongoing negotiations, or with its ability to complete a transaction. If the harm to a company’s business from disclosing outweighs the general benefit to the market of immediate disclosure, withholding disclosure is justified. In such cases a company may withhold public disclosure, but it must make a confidential filing with the securities commission. [FN 3] Certain jurisdictions also require companies to renew the confidential filing every 10 days should they want to continue to keep the information confidential.
(2) We discourage companies from delaying disclosure for a lengthy period of time as it becomes less likely that confidentiality can be maintained beyond the short term.
FN 2 Confidentiality is also permitted in situations where the material change consists of a decision to implement a change made by the company’s senior management, who believe that confirmation of the decision by the company’s board of directors is probable.
FN 3 While the Québec Securities Act does not require a confidential filing, it does relieve a company from the obligation to disclose a material change if senior management reasonably believes that (i) disclosure would be seriously prejudicial to it; and (ii) no one has purchased or sold, or will purchase and sell its securities based on the undisclosed information. A company must issue and file a press release once the reasons for not disclosing no longer exist.