LNG giant Shell revealed plans on Monday to ditch the company’s dual share structure and move its headquarters from the Netherlands to Britain.
Shell said in a statement the proposal would simplify the company’s share structure to increase the speed and flexibility of capital and portfolio actions.
The simplification would “strengthen Shell’s competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net-zero emissions business,” it said.
Under the proposal, Shell intends to change its share structure to establish a single line of shares, which is “simpler for investors to understand and value.”
The company will also align its tax residence with its country of incorporation in the UK.
Shell has been incorporated in the UK with Dutch tax residence and a dual share structure since the 2005 unification of Koninklijke Nederlandsche Petroleum Maatschappij and The Shell Transport and Trading Company under a single parent company.
However, Shell says it was not envisaged at the time of unification that the current A/B share structure would be permanent.
Following the simplification, shareholders would continue to hold the same legal, ownership, voting and capital distribution rights in Shell, the firm said.
Shell’s shares would continue to trade in Amsterdam, London and New York, with FTSE UK index inclusion.
Also, Shell’s corporate governance structure would remain unchanged. Chief executive Ben van Beurden and finance chief Jessica Uhl would move to the UK as well, Shell said.
Anglo-Dutch heritage
“Shell is proud of its Anglo-Dutch heritage and will continue to be a significant employer with a major presence in the Netherlands,” it said.
Its projects and technology division, global upstream and integrated gas businesses and renewable energies hub would remain located in The Hague.
“Carrying the Royal designation has been a source of immense pride and honour for Shell for more than 130 years,” it said.
However, the company anticipates it would no longer meet the conditions for using the designation following the proposed change.
Therefore, subject to shareholder approval of the resolution, Shell expects to change the company’s name from Royal Dutch Shell plc to Shell plc.
Shareholders to vote
The meeting of shareholders will take place in Rotterdam Ahoy on Friday, December 10.
The resolution requires the approval of at least 75 percent of the votes cast (in person or by proxy) at the meeting.
Shell’s chair, Andrew Mackenzie, said: “At a time of unprecedented change for the industry, it’s even more important that we have an increased ability to accelerate the transition to a lower-carbon global energy system.”
“A simpler structure will enable Shell to speed up the delivery of its powering progress strategy, while creating value for our shareholders, customers and wider society,” he said.
He said the simplification would normalize the company’s share structure under the tax and legal jurisdictions of a single country and make the firm more competitive.
As a result, Shell would have a better position to “seize opportunities and play a leading role in the energy transition.”
“Shell’s board unanimously recommends shareholders vote in favor of the proposed resolution,” Mackenzie said.
Dutch government “unpleasantly surprised”
In a response to this announcement, Economic Affairs and Climate Minister Stef Blok said the Dutch government was “unpleasantly surprised”.
He said the government regrets that Shell wants to move its head office to the UK.
“We are in discussion with Shell over the consequences of this plan for jobs, crucial investment decisions and sustainability,” he said.
Worth mentioning here, Shell has earlier this year said it would lodge an appeal against a Dutch court ruling obliging it to reduce its carbon emissions by 45 percent by 2030.
The Hague District Court ordered Shell in a ruling in May to reduce its CO2 emissions by 45 percent by 2030 with respect to the level of 2019 for the company and its suppliers but also customers.