Royal Dutch Shell is asking shareholders to approve a proposal to drop its dual share structure and 'Royal Dutch' from its name as it looks to move its tax residence to the UK from the Netherlands and make its share structure simpler for investors to value and understand.
Shell's board of directors will ask shareholders to vote on December 10, 2021 to establish a single line of shares to eliminate the complexity of Shell's A/B share structure and align 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 said on Monday.
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. At the time of unification, it was never meant for the current A/B share structure to be permanent, Shell said.
A simpler share structure is expected to accelerate distributions by way of share buybacks, as there will be a larger single pool of ordinary shares that can be bought back.
"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 Chair, Sir Andrew Mackenzie, said in a statement.
Shell, which has carried the "Royal" designation for more than 130 years, expects it will no longer meet the conditions for using the designation following the proposed change. Subject to shareholder approval, the company will be named Shell plc.
"We are unpleasantly surprised by this news. The government deeply regrets that Shell wants to move its head office to the United Kingdom," Stef Blok, Dutch Minister for Economic Affairs and Climate Policy, said, as carried by Bloomberg.
Shell's proposal to move to the UK and drop "Royal Dutch" from its name comes six months after a Dutch court ordered the supermajor to slash its carbon emissions by 45 percent by 2030 in a landmark ruling in a climate case brought by environmentalists.
Shell has also recently seen calls from activist investor Third Point to break up its legacy oil and gas business from the renewables division. Splitting up Shell's oil and renewables divisions would not work as the supermajor's strength is the integration and funding new energy solutions with the earnings from the legacy business, the company's top executives say.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More