Recently, in a conversation with someone I thought had deep knowledge about the securities markets and regulations, I was surprised to learn they didn’t believe the appointment of a new senior officer of a listed company was material information—or a material change.

As we talked, it became clear this may not be an isolated misunderstanding. There are likely other smart, experienced people in public markets who hold similar misconceptions about whether the appointment, resignation, or termination of a director or officer is “material” in the eyes of regulators and investors.

This is not a minor technicality—it’s a core principle of securities disclosure. It is also why I thought it was important to set out in a standalone article why leadership changes are always treated as material under securities law, and why the role—not just the title—matters.

Untangling the Terms

Part of the confusion stems from the terminology itself. Securities commissions and stock exchanges use three related terms—material information, material fact, and material change—that sound interchangeable. In reality, each has a specific meaning in law and policy. The distinctions are subtle but important.

Material Fact

This refers to information about a security (or derivative) that could reasonably be expected to have a significant effect on its market price or value.

• Example: Signing a significant new customer, discovering a major resource deposit, or losing a critical license—these are material facts, even before any change occurs in the business.

Material Change

Defined in securities legislation (e.g., British Columbia Securities Act, s. 1), a material change is a change in the business, operations, or capital of the issuer that would reasonably be expected to significantly affect the market price or value of its securities—or a decision to implement such a change.

• Example: Acquiring a competitor, shutting down a plant, or replacing a senior executive—these events alter the company’s structure or direction in a way investors care about.

The TSX Venture Exchange (Policy 3.3 – Timely Disclosure, item 3.8(m)) takes this further, explicitly listing any change in directors or senior officers as inherently material.

Material Information

This is the broadest category. Most commonly used in exchange policies, such as the TSX Venture Exchange or Canadian Securities Exchange (CSE), it means any fact, or change in fact, that would reasonably be expected to impact the market price or value of the issuer’s securities. It includes both material facts and material changes.

So, whether through legislation or exchange policy, the threshold is the same: if a reasonable investor would consider it important when making an investment decision, it’s material.

Why This Matters to Directors and Officers

These definitions are more than just legal categories:

• Material facts can exist even when the company hasn’t acted yet (e.g., knowing a key executive plans to resign).
• Material changes trigger specific obligations for timely disclosure under securities law.
• Material information is the umbrella term used in exchange rules—often with even tighter timelines for news releases.

Knowing which type of material event you’re dealing with helps companies comply with the right rules, at the right time—and avoid regulatory scrutiny.

Not All Officers Are “Senior Officers” — Why Titles Alone Don’t Determine Materiality

A frequent point of confusion—especially in companies with layered management—is who actually qualifies as an “executive officer” or “senior officer.” Job titles don’t always tell the whole story.

For example, I know companies with six Vice Presidents of Sales—one for the Midwest, one for Texas, another for Canada, and so on. These are important roles operationally—but not necessarily executive officers or senior officers in the eyes of regulators.

Role Over Title: The Legal Standard

Securities regulators and exchanges care about authority and influence, not job titles. An executive officer or senior officer typically is someone who:

• Has corporate-wide decision-making power;
• Participates in setting budgets, strategy, and organizational priorities;
• Has a governance or legal responsibility for disclosure or financial reporting;
• Reports to top executive management or the board.

So just because someone is called a VP doesn’t mean their appointment or resignation automatically triggers mandatory disclosure. But if that person oversees a major business unit or is involved in policy-level decisions, then the rules likely apply.

Disclosure Clarity Begins with Clear Roles

Getting this right helps avoid two mistakes:

• Under-disclosing real changes in leadership that affect governance or operations.
• Over-disclosing every internal reshuffling that doesn’t affect external valuation or investor expectations.

The goal is to inform investors when leadership shifts in a way that matters to the direction or integrity of the issuer itself.

Why Officer and Director Appointments Check All Three Boxes

When a public company appoints or removes a director or senior officer, it meets the test for all three key definitions: material fact, material change, and material information.

1. It’s a Material Fact

Leadership is not neutral. Investors care who is running the company—their qualifications, integrity, and track record. Knowing who holds those responsibilities directly affects investment decisions.

2. It’s a Material Change

Leadership switches are operational changes. A new CEO, CFO, or director has the power to set new strategies, influence investor relations, or take the company in a new direction. That’s squarely within the definition of a material change under securities legislation.

3. It’s Material Information

Because exchange policies like TSX Venture Exchange Policy 3.3 – Timely Disclosure capture both material facts and material changes, leadership changes are automatically considered material information—and require immediate disclosure.

Why Regulators and Investors Care About Leadership Changes

Leadership isn’t just about who’s in the chair—it’s about signals, strategy, and risk. Appointments and resignations can dramatically shift how the company is valued and how it is seen by stakeholders.

From an Investor’s Perspective:

• Signals of Change: Resignations may signal disagreement, poor performance, or future strategy shifts.
• Risk Management: A new CFO or CEO increases execution and forecasting risk.
• Governance Evaluation: Board turnover or weak appointments may suggest poor oversight.
• Performance Impact: Leadership often drives budgets, reporting, and culture. Changes impact execution.
• Market Sensitivity: Unexplained exits or surprise hires can cause stock volatility.

From a Regulator’s Perspective:

• Market Transparency: Securities law calls for disclosure of changes likely to influence investment decisions.
• Financial Honesty: CFO or audit committee changes affect financial reporting integrity.
• Investor Protection: Prevents selective disclosure, insider knowledge, and information asymmetry.
• Sector Monitoring: Frequent executive turnover may reflect governance issues in the sector.
• Regulatory Fit: Exchanges review directors and officers for qualifications and compliance.

The Private Placement Exemption Connection

One of the benefits of being a director or officer of an issuer is the ability to invite close friends and family to participate in a private placement under the close personal friends, family, and business associates exemption in NI 45-106, section 2.5.

The logic behind this exemption is that these individuals are presumed to have privileged access to information through their relationship with someone in a position of leadership or oversight. But that assumption only holds if the director or officer in question truly fills the role in substance and in law.

Make Sure the “Executive Officer” Is Actually an Executive Officer

The FFBA exemption specifically applies to friends, family, and business associates of directors, control persons, founders, or executive officers. That term—executive officer—is legal, not cosmetic.

To qualify, an executive officer must:

• Be in a policy-making role;
• Have visibility into strategic planning or financial controls;
• Be inside the issuer’s top leadership (e.g., C-suite, executive committee).

Having a title like “VP of Sales – Midwest” is not enough. If that person doesn’t have enterprise-level decision-making power, their close contacts may not be eligible under NI 45-106.

And misclassifying someone as an executive officer just to provide their contacts with access to an offering is a compliance risk. Full stop.

The Hidden Risk of Misuse

Improper reliance on this exemption can lead to:

• Invalidly issued shares (no legally available exemption);
• Investor rescission rights, especially where material facts were omitted;
• OSEs or enforcement action by securities commissions;
• Damage to board and market credibility, especially in repeat offerings.

Appointments should never be made just to qualify someone for a private placement. If that happens, the appointment itself may be scrutinized—and treated as a sham for regulatory purposes.

Case Law — Nash, Re (2012 ABASC 253)

The Alberta Securities Commission addressed this exact issue in Nash, Re. When a CEO/president/director resigned, the Commission found it to be both a material fact and a material change under Alberta securities law.

The takeaway was straightforward: a leadership change inherently alters how investors view the value and risk of a company. Even if the company didn’t think it was material at the time, the Commission made it clear that the departure deserved timely and proper disclosure.

Why Leadership Changes Are Always Material

The appointment or resignation of a director or senior officer doesn’t just affect financing—it hits at core issues of governance, direction, and market perception.

1. Control of Strategy and Vision

Directors and officers define corporate priorities, allocate capital, manage risk, and determine execution paths. Changing that team changes direction.

2. Market Reaction

Investors interpret leadership shifts as positive or negative signals—often creating price movement, even before the next quarter’s results.

3. Regulatory Fit and Compliance

Exchanges and commissions review officer appointments to ensure “fit and proper person” standards are met. Disclosure is part of the vetting process.

4. Fiduciary Responsibilities

When directors and officers change, there’s a real shift in legal responsibility and oversight—they hold duties to the corporation and its shareholders.

5. Key Agreements May Depend on Leadership

Some contracts (especially joint ventures, loans, or M&A deals) include “key person” clauses. A change in leadership can unravel complex agreements.

The Takeaway for Directors and Officers

Whether it’s a new board appointment, a C-suite reshuffle, or someone stepping down, always treat leadership changes as material until proven otherwise.

Failing to disclose correctly and promptly can result in:

• Regulatory sanctions (fines, cease trade orders, or enforcement);
• Market credibility loss (trust damage from selective disclosure);
• Financing fallout (allegations of misrepresentation);
• Deal delays (transactions paused over unstable leadership); and
• Personal liability (especially where directors and officers knew or ought to have known disclosure was required).

Be clear about who qualifies as a “senior officer” or “executive officer” under securities law. Inflated job titles don’t carry legal weight—and misclassifying them can lead to disclosure failures, failed financings, or worse.

So the next time someone asks whether a leadership change is “material,” you might want to try what I did, ask:

      “If Bill Gates were appointed Chairman, can we agree that would be material?”

The answer was yes, of course.

But the truth is—the principle holds whether the appointment is high-profile or not. What matters isn’t celebrity—it’s control, access, and the obligation to tell the market who’s in charge.