Latest News by Industry
• The oil giant will consolidate its London and Amsterdam businesses to navigate to a lower-carbon global energy system
• It said that the new structure will facilitate shareholder returns and amend its portfolio
Royal Dutch Shell plans to consolidate its London and Amsterdam businesses, and will shift its head office from the Hague to the U.K. in a bid to navigate to a lower-carbon global energy system, the company announced on Monday.
The company said that under its plan, the company would take up tax residence in the U.K., rather than the Netherlands. The oil major would drop the Royal Dutch designation it has held for more than 130 years, and change its name to Shell PLC.
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. A simpler structure will enable Shell to speed up the delivery of its Powering Progress strategy.”
The oil giant said that by ending its long-held, dual structure, investors would be able to value the company, facilitate returns to shareholders and make it easier to amend its portfolio of assets.
Defense against the Dutch drama
Shell has been at loggerheads with the Dutch authorities over the country's 15% dividend withholding tax on some of its shares, making them less attractive for international investors. Shell introduced the two-class share structure in 2005 after a previous corporate overhaul, stated a Reuters report.
The single structure would put all shares under British law removing the shares from the law that puts them under this tax. Shell would be able to strike quicker sale or acquisition deals, mentioned the report.
Sir Andrew Mackenzie said, “The simplification will normalize our share structure under the tax and legal jurisdictions of a single country and make us more competitive. Shell’s Board unanimously recommends shareholders vote in favor of the proposed resolution.”
Last month, the largest Dutch state pension fund ABP announced that it would drop Shell and all fossil fuels from its portfolio.
In May, a Dutch court ordered Shell to deepen its planned greenhouse gas emission cuts to align with the Paris climate deal to limit global warming to 1.5 degrees Celsius. Climate change groups and Shell have said the change would not change the impact of the court decision.
Investor issues
Activist investor Third Point LLC called for a breakup of the company. Investor Dan Loeb argued that this would strengthen Shell’s performance and market value.
Shell’s executives argued that the company’s businesses worked better together. They said that the oil and gas business supported the firm’s lower-carbon energy investments.
Shell isn’t the first company to propose a consolidation of its two businesses. Last year, Unilever PLC consolidated its dual British and Dutch structure into a single company based in the U.K. It had initially planned to set up its headquarters in the Netherlands but changed tack after a revolt by some of its British investors.