Corporate actions

A corporate action is a change made by a fund, ETF or the company that runs it that affects the people invested in it. Examples include a fund merging with another fund, launching a cheaper share class, changing its name or index or closing altogether.

Most corporate actions are routine. You keep the same value of investment as it just sits in a slightly different place or under a slightly different name.

At Prosper you invest through funds and ETFs rather than individual company shares, so the corporate actions you'll come across are fund-level events rather than things like rights issues or takeover bids.

If something changes, we'll let you know. We'll email you and, where relevant, show a message in the app. In most cases there's nothing for you to do, however. We apply the change to your account for you.

Corporate actions don't apply to Prosper savings accounts or the Cash ISA. Those are cash deposits held with our partner banks, not investments.

Mandatory: the change happens automatically and there's no decision for you to make. You're affected as an investor, but no action is needed. Most fund events fall into this category.

Mandatory with options: the change is going ahead either way, but there may be more than one outcome available. If a decision is ever needed from you, we'll contact you directly, explain the options and give you a clear deadline.

Voluntary: nothing happens unless investors choose to take part. These are rare in funds and ETFs.

Two funds are combined into one, usually because they follow similar strategies or because the manager is simplifying its range. Your holding is exchanged for units or shares in the surviving fund of equivalent value. The number of units you hold will usually change because the unit price of the new fund is different, but the value of your investment on the day of the merger doesn't.

A fund may create a new share class with lower ongoing charges, a different currency or a different way of handling income. Managers often move existing investors into the better class automatically. Where this happens, we'll convert your holding. Your value stays the same; your ongoing charge may go down.

Occasionally a manager decides to close a fund, often because it hasn't attracted enough assets to run efficiently. The fund's assets are sold and the proceeds returned to investors. The cash is paid into your uninvested cash balance within your investment account (Stocks & Shares ISA, Personal Pension or GIA), from which you can then choose where to reinvest it.

Very rarely, a fund manager will suspend dealing in a fund, meaning no one can buy or sell it for a period. This usually happens when the fund can't value its assets reliably or is facing unusually high withdrawals. You still own your investment and it still has value, but you won't be able to trade it until dealing reopens.

Funds are sometimes renamed or re-coded after a change of manager, a rebrand or a move to a different index provider. Nothing about your investment changes apart from how it's labelled. If a holding in your app looks unfamiliar, this is usually why.

A fund might change the index it tracks, adjust its investment policy or move to a new management company. These changes don't alter the value of your holding, but they can change what you're invested in, so it's worth reviewing whether the fund still suits you.

Many funds pay out income – dividends from shares or interest from bonds – to their investors. What happens next depends on the type of fund you hold. Accumulation funds reinvest the income automatically, so you'll see the value reflected in the unit price rather than as a separate payment. Income (or distributing) funds pay the income out and it will be paid into the uninvested cash balance within your investment account on the pay date.

A fund can split its units into a larger number of smaller ones or consolidate them into fewer, larger ones. The total value of your holding is unaffected – only the unit count and unit price change.

Depending on the impact and urgency of the corporate action, we may email you at the address registered on your account and, where relevant, show a notification in the app. Please make sure your email address is up to date so you don’t miss anything.

Usually not. The vast majority of fund corporate actions are applied automatically and you'll simply see the result in your account. If we ever need a decision from you, we'll make that obvious in the message we send, including what you need to do and by when.

No. We can't give you a personal recommendation on a corporate action as that would constitute financial advice. We'll give you the facts and point you to the fund's own documentation, such as the Key Investor Information Document (KIID) or prospectus, so you can make your own decision.

If you'd like personalised support, you can book a session with our financial guidance service.

Where a corporate action does involve a deadline, ours will be earlier than the one published by the fund. That's because your investments are held by our custodian, Seccl, who needs to collect responses from all investors and submit them to the fund in good time. Building in that buffer means your instruction arrives before the fund's own cut-off.

We can't act on your behalf once our deadline has passed. If the corporate action has a default option, that's what will be applied to your holding.

Prosper doesn't charge you to process a corporate action and we don't charge platform or dealing fees. Some events involve costs at fund level – for example, the costs of winding up a closing fund – which are borne by the fund itself and reflected in its price. Those aren't Prosper charges.

If your fund is held in a Stocks and Shares ISA or a Personal Pension (SIPP), corporate actions happen inside the ‘tax wrapper’ and there's no personal tax to consider. In a General Investment Account (GIA), some events – such as a fund closing and paying out cash – can count as a disposal for Capital Gains Tax purposes and distributions may be subject to dividend or interest taxation.

Tax treatment depends on your individual circumstances and current rules can change. If you're unsure, contact HMRC or speak to a tax adviser.

No. Units moving between funds as a result of a corporate action isn't a new subscription or contribution, so your annual allowances are unaffected.

Our fund fee refunds apply to a specific list of funds. If a fund on that list merges or converts into a different fund or share class, we'll confirm at the time whether the refund continues to apply to the new holding.

Corporate actions are handled by whoever holds your investment at the time. If the event falls before your transfer completes, your existing provider will deal with it and the outcome will come across as part of the transfer. We'll pick things up from the point your assets land with us.