Shell to simplify its structure and move to London – archyde

by Shadia Nasralla and Sachin Ravikumar

(Reuters) – Royal Dutch Shell on Monday announced plans to move its head office and tax residence from The Hague, the Netherlands, to London and to abolish its two-class share listing system in order to simplify its organization and to satisfy its shareholders while it is engaged in a thorny energy transition.

The Anglo-Dutch oil giant also plans to remove “Royal Dutch” from its name in favor of Shell Plc.

“(This) simplification is designed to strengthen Shell’s competitiveness and accelerate both distributions to shareholders and the implementation of its strategy to achieve carbon neutrality,” the group said.

“The current complex stock structure is under constraints and may not be sustainable in the long term,” he explained.

Shell, which intends to concentrate on its listing in London but which will remain present on the Amsterdam and New York stock exchanges, gained 2.23% in the morning.

“We see merits in the proposed restructuring of Shell’s capital structure and tax residence. Among other benefits, the proposed changes will increase Shell’s ability to repurchase shares,” Jefferies analysts observed in a note.

For its part, the Dutch government said it was “unpleasantly surprised” by the news of the transfer of the group’s headquarters.

“We are in dialogue with the management of Shell on the consequences of this plan for employment, crucial investment decisions and sustainability”, reacted Monday the Minister of Economic Affairs and Climate Policy Stef Blok.

UK Enterprise Minister Kwasi Kwarteng hailed Shell’s decision, citing “a clear vote of confidence” in the national economy.

The implementation of the measures proposed by Shell will have to obtain the green light of 75% of the shareholders at a general meeting scheduled for December 10.

PRESSURE ON A SPLIT

Shell’s announcements come weeks after activist fund Third Point took a large stake in the group, urging it to split into two separate companies.

Large listed groups are facing increasing pressure to simplify their structure, which last week prompted General Electric, Toshiba and Johnson & Johnson to announce a split in their activities.

Shell had also long been in conflict with the Dutch authorities over the withholding tax on dividends, which the group sought to avoid paying through its two classes of shares.

The Dutch government tried in 2018 to remove this withholding tax in order to keep the headquarters of large companies like Shell and Unilever in the Netherlands, but Parliament was opposed to it.

Last year, Unilever merged its UK and Dutch legal entities into a holding company now headquartered in London.

(Report Sachin Ravikumar and Shadia Nasralla, French version Juliette Portala, edited by Blandine Hénault)