News releases
What is a news release?
Securities laws require a company to issue a news release when there is a material change
in its business operations, assets, or ownership. The information in a news release may affect your decision to buy, hold, or sell a company’s securities. When there is a material change, you can find the news release on SEDAR.
Risk warning: you may receive documents that appear to be company news releases by fax or e-mail. Often these come from promoters who attempted to hype-up the security in a pump-and-dump scheme. Before acting on any news release, check on SEDAR to make sure the company issued it.
What should you focus on?
Focus on the change in the company’s business, operations, or assets under discussion. This is the company’s view of things so you may want to check the information with an independent source. You certainly should do that if the information from the company sounds too good to be true.
What to ask yourself:
- Do you understand the change or proposed transaction the company is discussing?
- Do you understand the impact the material change will have on the company?
- Do you think the change or proposed transaction will benefit the company, and therefore you the shareholder?
If you do not feel you have sufficient information or you do not understand the information in the news release and related documents, you have some options:
- Ask your advisor to discuss the proposed change with you
- Ask another trusted professional (for example, your lawyer or accountant) to discuss the proposed change with you
- Call the company and ask for a further explanation
Most public companies post their news releases on their website. Often you would need to sort through many news releases to get to ones that would be of interest to you as an investor.