Shell to simplify share structure and pay taxes in Britain as the oil and gas giant moves to ‘speed up’ net-zero drive
- Investors will vote on scrapping Shell’s existing dual share structure
- The company will drop ‘Royal Dutch’ from its name and move its HQ to the UK
- The oil giant’s board say the change will improve Shell’s competitiveness
- It will also improve its capacity to hand cash back to shareholders via buybacks
Royal Dutch Shell shareholders are set to vote on scrapping the oil giant’s dual share structure as part of the board’s efforts to accelerate its transition to net-zero emissions.
The proposal would ‘eliminate the complexity’ of the existing structure by establishing a single line of shares, Shell’s board said, while strengthening the firm’s competitiveness and its capacity to hand cash back to shareholders via buybacks.
It will also align the Shell’s tax residence with its country of incorporation in the UK, where it will hold board and executive committee meetings, and locate its chief executive and chief financial officer.
The company, which has set targets to gradually shift from hydrocarbons, expects to drop ‘Royal Dutch’ from its name and be called Shell
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.
The board told investors on Monday that it ‘was not envisaged at the time of unification’ that the current share structure would be permanent.
Dutch economic minister Stef Blok told reporters this morning the country’s government was ‘unpleasantly surprised’ by Shell’s decision to move its HQ to Britain.
Shell shares will continue to be listed in Amsterdam, London and New York, with FTSE UK index inclusion.
The company, which has set targets to gradually shift from hydrocarbons, expects to drop ‘Royal Dutch’ from its name and be called Shell.
The moves come weeks after hedge fund Third Point disclosed a large stake in Shell, calling on the oil and gas major to split into multiple companies to increase its performance and market value. Shell hit back, with top executives saying its businesses operated better together than apart.
Shell, along with other European oil majors, has set targets to move away from oil production while investing in non-fossil energy sources like solar and wind power.
The firm said a simpler share structure will enable it to ‘speed up the delivery’ of its ‘Powering Progress’ strategy, which aims to accelerate the transition of the business to net-zero emissions, in step with society.
Shell shares rose 2.4 per cent higher to 1,671p in early trading.
Shell’s chair, Sir 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.
‘The simplification will normalise our share structure under the tax and legal jurisdictions of a single country and make us more competitive.
‘As a result, Shell will be better positioned to seize opportunities and play a leading role in the energy transition. Shell’s Board unanimously recommends shareholders vote in favour of the proposed resolution.’