Shell wants to simplify its company structure. Among the proposals sent to its shareholders is a change to its share structure as well as plans to move the company headquarters to the UK. The Dutch Government says it is ‘unpleasantly surprised’ by the news.
The energy company says the simplification is designed to strengthen its competitiveness and accelerate both shareholder distributions and its strategy to become a net-zero emissions business. Changing its share structure to a single line of shares is to make them 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. Shell adds that it was not envisaged at the time of unification that the current A/B share structure would be permanent.
A conventional single-share structure is said to allow for an acceleration in distributions by way of share buybacks, as there will be a larger single pool of ordinary shares that can be bought back. Shell also expects it will help to face the challenges posed by the energy transition, by managing its portfolio with greater agility. Furthermore, such a structure brings the company in line with its competitors and most other global companies. The company feels the current complex share structure is subject to constraints and may not be sustainable in the long term.
Shares will continue to be listed in Amsterdam, London and New York (through the American Depository Shares programme), with FTSE UK index inclusion. It is fully expected AEX index inclusion will be maintained. Shell’s corporate governance structure will also remain unchanged.
Presence in the Netherlands
Shell stresses it is proud of its Anglo-Dutch heritage and will continue to be a significant employer with a major presence in the Netherlands. Its Projects and Technology division, global Upstream and Integrated Gas businesses and renewable energies hub remain located in The Hague.
The company’s growing presence in wind projects off the Dutch coast, recent decision to build a world-scale low-carbon biofuels plant at the Energy and Chemicals Park Rotterdam, plan to build Europe’s biggest electrolyser in Rotterdam, and its intention to participate in the Porthos carbon capture and storage project, all underline the importance of the Netherlands to the company’s energy transition activities, states Shell.
Dutch Minister of Economic Affairs and Climate Policy Stef Blok says the Dutch Government ‘deeply regrets’ the intention of the company to move its headquarters to the UK. He adds: ‘We are in discussion with Shell about the impact of this intention on jobs, crucial investment decisions and sustainability. These are hugely important. Shell has assured us that the personnel consequences of this decision are limited to the relocation of a number of executive/board positions from the Netherlands to the United Kingdom.’
No longer Royal
The company has carried the Dutch Royal designation for over 130 years. However, the company anticipates it will no longer meet the conditions for using the designation following the proposed change. Therefore, subject to shareholder approval of the resolution, the company’s name will change from Royal Dutch Shell plc to Shell plc.
‘The simplification will normalise our share structure under the tax and legal jurisdictions of a single country and make us more competitive,’ says Shell’s Chair, Sir Andrew Mackenzie. ‘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.’
Picture: The Pernis refinery in the Port of Rotterdam (by Shell).