A corporate action is an event that changes something about an investment you hold. For ETFs, this could include things like a merger, delisting, fund closure, name change or stock split.
If an ETF you hold is affected by a corporate action, we’ll contact you with the information you need. We’ll usually email you before the change happens, and then email you again once it’s complete to confirm what’s changed and what you should see in your account.
In most cases, you won’t need to do anything straight away. If you do need to take action, we’ll explain this clearly in the email we send you.
What we’ll tell you
When we email you about a corporate action, we’ll explain:
- what’s happening to the ETF
- when the change is expected to take place
- whether buying or selling may be temporarily unavailable
- whether you need to take any action
- what you should expect to see in your account once the change is complete
Sometimes we may not receive much notice from the ETF provider, exchange or custodian. If this happens, we’ll contact affected customers as soon as we have enough information to explain what’s happening.
Types of corporate action
ETF merger
An ETF merger is when one ETF is merged into another fund.
If this affects an ETF you hold, your existing ETF may be replaced with units in a different ETF, or you may receive cash, depending on the terms of the merger.
We’ll email you to explain:
- which ETF is affected
- what it’s merging into
- what will happen to your holding
- whether buying or selling will be temporarily unavailable
- when we expect the change to show in your account
Once the merger has been processed, we’ll email you again to confirm what has happened.
ETF delisting or fund closure
A delisting means an ETF is no longer available to trade on the relevant exchange or through InvestEngine. A fund closure means the ETF provider is closing the fund.
If an ETF you hold is being delisted or closed, we’ll email you to explain what’s happening and what your options are.
Depending on the event, you may be able to sell the ETF before the delisting or closure takes place. If you don’t sell before the relevant deadline, the ETF may be sold or processed as part of the corporate action, and any cash proceeds will be added to your account once received and processed.
Once the ETF has been sold down and the corporate action is complete, we’ll email you to confirm this. If the ETF still appears in your portfolio after it has been sold down, we’ll ask you to remove or delete it from your portfolio.
Stock split
A stock split changes the number of ETF units you hold and the price of each unit.
For example, if an ETF has a 2-for-1 stock split, you would hold twice as many units, but each unit would usually be worth around half as much. The overall value of your investment does not change because of the stock split alone.
While a stock split is being processed, you may temporarily see differences in:
- the number of units shown in your portfolio
- the ETF price
- your portfolio value
- your performance graph
This can happen while our systems, pricing data and custody records are updating. Once processing is complete, your holdings and portfolio value should display correctly.
Buying or selling may also be temporarily unavailable while we process and reconcile the stock split. We’ll let you know if this applies.
Will I always be told before it happens?
We’ll aim to contact affected customers before a corporate action takes place where we can.
However, we don’t always receive advance notice. Sometimes information may arrive late, be incomplete, or only become clear after the event has started to affect holdings, prices or account displays.
If this happens, we’ll work to confirm the details as quickly as possible and will contact affected customers with an update.
Do I need to do anything?
In many cases, you won’t need to do anything. We’ll process the corporate action and email you once it’s complete.
You may need to take action if:
- we tell you an ETF is being delisted or closed and you want to sell before a deadline
- the ETF is no longer available to buy through InvestEngine
- buying or selling is temporarily unavailable and you need to wait for trading to resume
- a delisted ETF has been sold down and needs to be removed or deleted from your portfolio
If action is needed, we’ll explain this in the email we send you.
Why can’t I buy or sell the ETF?
Buying or selling may be temporarily unavailable while a corporate action is being processed. This is usually to make sure holdings, prices and account records are updated correctly.
For example, trading may be paused while:
- a stock split is being applied
- an ETF merger is being processed
- an ETF is being delisted or closed
- we’re reconciling updated holdings or cash proceeds
Once the corporate action has been completed and our records are updated, we’ll confirm what has happened and whether trading is available again.
What happens after the corporate action is complete?
Once the corporate action has been processed, we’ll usually email affected customers to confirm:
- what has happened
- what has changed in their account
- whether any new ETF units or cash proceeds have been added
- whether buying or selling has resumed
- whether any further action is needed
If something doesn’t look right after you receive our confirmation email, please contact our Support team and we’ll be happy to help.
Need a hand?
If you have any questions, or you’d find it easier to get this information another way, please contact us at support@investengine.com and we’ll do our best to help.
Your capital is at risk when investing. The information contained in this article does not represent investment advice, recommendation, or inducement to buy or sell financial instruments. Tax treatment depends on personal circumstances and may be subject to change.