Materiality is a
legal term which can have different meanings, depending on context. When speaking of facts, the term generally means a fact which is "significant to the issue or matter at hand".
[1]An item of evidence is said to be material if it has some logical connection to a fact of consequence to the outcome of a case. Materiality, along with probative value, is one of the two characteristics which makes a given item of evidence relevant.[2] This is largely dependent upon the elements of the cause of action the plaintiff seeks to prove, or that the prosecutor must prove in a criminal case in order to secure a conviction. Which issues must be factually proven are therefore a product of the underlying substantive law.[3]
Within the context of corporate and securities law in the United States, a fact is defined as material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. In this regard, it is similar to the accounting term of the same name.
Materiality is particularly important in the context of securities law, because under the Securities Exchange Act of 1934, a company can be held civilly or criminally liable for false, misleading, or omitted statements of fact in proxy statements and other documents, if the fact in question is found by the court to have been material.[4]
