A share in my ISA is subject to a corporate action. Does this have any additional implications?
Corporate actions on holdings within ISAs will be processed in the same way as those in other accounts with some key exceptions:
Some corporate actions require you to make a cash payment in return for a new quantity of shares, e.g. rights issues, open offers, exercise of warrants. If you want to hold the new shares within an ISA you must fund this purchase from cash held within the ISA. This may mean using an existing cash balance or selling shares from within the ISA to raise the cash. Alternatively new money can be added to an ISA subject to your annual ISA subscription allowance.
If you are unable to fund the purchase from cash within an ISA you will be given the opportunity to take up new shares outside of the ISA. To do this you may use cash held outside of the ISA, and on completion of the offer the new shares will be transferred out of the ISA. The shares can be transferred into a different Hargreaves Lansdown Nominee Account (or Fund & Share Account) or you can request a share certificate.
HM Revenue & Customs have strict guidelines on what investments can and cannot be held within an ISA. Full details can be found on the HM Revenue & Customs website.
Examples of non-qualifying investments include warrants, with certain exceptions. On occasion a corporate action may result in you being credited with such an investment in your ISA.
Where such a situation arises HM Revenue & Customs regulations stipulate that the holding must be removed from the ISA within 30 calendar days. To do this you may sell your holding and retain the cash in the ISA, or transfer the shares out of the ISA. The shares can be transferred into a different Hargreaves Lansdown Nominee Account (or Fund & Share Account) or you can request a share certificate.
In the event that you are required to take action in respect of a holding in an ISA you will be notified in writing.
Please note that there is an administration fee for issuing a share certificate for a new holding resulting from a corporate action.