UK Civil Action Triggers Section 17 Disclosure Application before Ontario’s Capital Markets Tribunal

The Capital Markets Tribunal recently considered an application for authorization to disclose information, made pursuant to section 17(1) of the Securities Act, by a mining subsidiary whose parent company had been ordered to disclose confidential OSC documents by a UK court in UK civil proceedings.

In this article, Dan Thomas analyzes the implications of the decision in Katanga Mining Limited v Ontario Securities Commission, 2025 ONCMT 4.

OSC investigation

Katanga Mining Limited (“Katanga”) and several of its officers and directors became the subject of a confidential investigation by the Ontario Securities Commission (“OSC”) in March 2017 alleging the misstatement of material facts in the company’s financial reporting for a five-year period and the failure to properly disclose the risks of operating in the Democratic Republic of the Congo.

Settlement with OSC

At the end of 2018, Katanga and seven of its officers and directors, reached a comprehensive settlement agreement with the OSC. The $30 million settlement was approved by the Capital Markets Tribunal (the “Tribunal”) on December 18, 2018. At the time, the fine of $28.5 million was regarded by the industry as being one of the most significant fines levied by the Commission.

Katanga becomes wholly-owned subsidiary of Glencore

In June 2020, Katanga became a wholly owned subsidiary of Glencore Plc (“Glencore”), which was previously Katanga’s majority shareholder and only customer.

UK litigation and UK High Court order for disclosure of confidential OSC documents

Glencore subsequently became a defendant in a civil claim before the High Court of Justice in England & Wales (the “UK High Court”) which alleged material misleading statements and omissions by Katanga in its public company disclosure. The pleadings in the UK High Court refer to the OSC’s investigation and the settlement agreement approved by the Tribunal.

The UK High Court ordered that confidential documents provided by the OSC to Katanga during its investigation must be disclosed in the UK proceeding to the extent that they are relevant to the issues in the UK litigation (the “Confidential Documents”).

Katanga’s application to the Tribunal

As a result of the UK High Court’s order, Katanga made an application under section 17 of the Securities Act(“the Act”) to the Tribunal. The sole issue before the Tribunal was whether Katanga had demonstrated that it was in the public interest to grant a section 17 order permitting it to disclose the Confidential Documents to members of Glencore’s internal and external counsel teams so that they could determine which of the Confidential Documents, if any, were relevant to the UK litigation.

Considerations for the Tribunal

The Tribunal made the following observations regarding section 17 disclosure orders:

• The Tribunal may order that confidential documents related to an OSC investigation be disclosed under section 17(1)(b) of the Act, if it “considers that it would be in the public interest” to do so.
• The applicant bears the burden of demonstrating that the proposed order is in the public interest.
• The public interest threshold is “high”; the Tribunal seldom provides exception to the statutory confidentiality requirements in section 16 of the Act; and section 17 disclosure orders are only granted in “the most unusual circumstances”.

The Tribunal further considered the following factors in reaching its decision on Katanga’s application:

• The purpose for which the evidence is sought and the specific circumstances of the case;
• The high degree of confidentiality associated with compelled evidence and the strict limitations on its use;
• The reasonable expectations of witnesses compelled to provide evidence;
• The protections against self-incrimination provided by the Charter, the Canada Evidence Act, and the Ontario Evidence Act;
• The continued requirements for confidentiality balanced with the Tribunal’s assessment of the public interest at stake, including harm to the person whose testimony is sought; and
• The integrity of OSC investigations.

Tribunal’s reasons and decision

Katanga made an attractive proposal to the Tribunal in the form of narrow relief, namely: an application to permit disclosure to Glencore’s legal counsel – who would sign undertakings to be bound by the confidentiality requirement of section 16 of the Act – to allow them to assess whether the Confidential Documents were relevant to the UK claim. The Tribunal agreed that Ontario lawyers who were not qualified to practice law in the UK could not make a relevance assessment under UK law.

The Tribunal observed that the close relationship between Glencore and its wholly owned subsidiary Katanga made the disclosure request analogous to providing disclosure to Katanga’s own counsel and not to “an outsider”. Katanga made the creative submission that their application was merely the logical extension of the presumptive statutory exception – that allows disclosure to a company’s legal counsel under section 16(1.1)(a) of the Act. The Tribunal agreed.

Regarding the public interest, the Tribunal found that given its finding that the confidentiality requirements in section 16 of the Act would be preserved by the undertakings entered into by Glencore’s legal counsel, the public interest against disclosure was not strongly in issue. Significantly, the witnesses who may have been impacted by the narrow relief had been notified and either took no position or did not respond. The Tribunal further found that neither Charter or integrity considerations were engaged by the application in any meaningful way.

The Tribunal ordered that the Confidential Documents could be disclosed to a list of Glencore’s internal and external legal counsel for the purposes of reviewing the documents for relevance to the UK claim subject to the term, imposed under section 17(4) of the Act, that counsel sign acknowledgments that they were bound by section 16 of the Act.

Key Takeaways

What happens next?

• Importantly, in its concluding remarks, the Tribunal – in noting that it made no decision about whether the Confidential Documents may be disclosed in the UK proceeding – reaffirmed that it possessed the “exclusive statutory jurisdiction” to determine the public interest when disclosure of documents protected by section 16 confidentiality requirements are in issue. The Tribunal was clear that the disclosure granted was for the limited purpose of review.
• Therefore, it is useful to consider what will happen if Glencore’s internal and external counsel determine that one or more of the Confidential Documents is relevant to the UK claim and, further, is to be disclosed in that proceeding. Given the limited basis on which the Tribunal granted disclosure of the Confidential Documents, and the Tribunal’s assertion that it has exclusive statutory jurisdiction to determine disclosure of documents protected by section 16, we may see Katanga return to the Tribunal to seek its permission to disclose any relevant Confidential Documents in the UK proceedings. It is likely that the Tribunal will take a much closer look at the public interest, if it is asked to consider any wider disclosure of the Confidential Documents.

A ‘logical extension’ to Section 16(1.1)(a) of the Act?

• An interesting aspect of the decision is the Tribunal’s acceptance of Katanga’s submission on the ‘logical extension’ of section 16(1.1)(a) of the Act to lawyers for a parent company.
• Permitting disclosure of confidential investigation documents to a respondent’s counsel or company counsel is of course routine. However, the Tribunal stated in its decision that “the value” in allowing individuals and companies who are subject to confidentiality obligations to obtain legal advice had the “same value” as the Confidential Documents being provided to counsel for Katanga’s parent company for the limited purpose of obtaining legal advice. This is something of an extension of the application of the exception under section 16(1.1)(a) of the Act.
• Nonetheless, before the claim can be made that section 16(1.1)(a) of the Act has a much wider application than previously contemplated, it is observed that the final word on whether this decision has opened the door to such further disclosure – to a parent’s counsel – being permissible in the future is not yet clear. The Tribunal was considering specific facts in Katanga. Parties would be advised to seek clarification from their own counsel and, if so advised, from the Tribunal if faced with a similar factual scenario, given the pre-existing statutory non-disclosure obligation.

Ongoing non-disclosure obligations

• The Katanga proceedings concluded almost seven years ago with a comprehensive settlement agreement. Despite the OSC’s investigation ending, the Tribunal recognized that the statutory non-disclosure requirements continued to apply to Katanga under section 16 of the Act.
• The decision serves as a reminder that non-disclosure obligations arising from an OSC investigation are ongoing. Parties who have been the subject of an OSC investigation should periodically remind themselves of their obligations under section 16 of the Act.

The procedure for section 17 disclosure applications

• Parties subject to confidential investigations by the OSC need to be aware of the reality that confidential documents and information may be highly sought after, following any publicly available settlement agreement being published, by adverse parties in subsequent foreign securities civil actions and could potentially be requested by those parties in such proceedings.
• The Tribunal has helpfully recognized in Katanga a common sense method by which a party’s internal and external counsel are afforded the opportunity to determine the relevance of confidential information and/or documentation to any foreign proceeding before any disclosure to an adverse party is considered, or takes place. Nonetheless, the Tribunal will consider relief on a case by case basis.
• As in the Katanga matter, an application under section 17(1) of the Act is the appropriate means by which a party may seek approval for disclosure of confidential information/documents. The Tribunal in Katanga has helpfully clarified the correct procedure when parties are faced with such a scenario, and the Tribunal has re-emphasized that it is the sole gatekeeper of such applications.

About Ghahhary Thomas LLP

At Ghahhary Thomas LLP we have long-standing experience in securities enforcement matters before the OSC and the provincial securities regulators. We are dual qualified UK and Ontario lawyers with significant experience in cross-border advice and disputes with a UK-element.