Shell plans UK relocation, sparking Dutch outrage
Date11/15/2021
(MENAFN- AFP)
Energy giant Shell on Monday announced plans to move its headquarters from the Netherlands to the UK and drop Royal Dutch from its name in a major shakeup that angered the Dutch government.
The plan, seen as a post-Brexit boon for London, will see the company switch its tax residence to the UK.
Shell's plan to end its Anglo-Dutch structure also follows pressure by activists in the Netherlands for the company to slash its harmful emissions.
"We are unpleasantly surprised by this. The cabinet deeply regrets this intention," Economic Affairs Minister Stef Blok said in a statement on Twitter.
Royal Dutch would be dropped from the name for the first time in 130 years.
"We are in talks with Shell about the implications of this move for jobs, critical investment decisions and sustainability. Those are hugely important," Blok added.
Shell said it plans to relocate to the UK its chief executive Ben van Beurden and chief financial officer Jessica Uhl on condition of shareholder approval in a vote due December 10.
The company has been incorporated in the UK with Dutch tax residence since the 2005.
This followed the unification of Koninklijke Nederlandsche Petroleum Maatschappij and The Shell Transport and Trading Company under a single parent company.
Shell said in Monday's statement that it "is proud of its Anglo-Dutch heritage and will continue to be a significant employer with a major presence in the Netherlands".
The company said its projects and technology division, global upstream and integrated Gas businesses and renewable energies hub would remain located in The Hague.
Shares will continue to be listed in Amsterdam, London and New York, it added.
- Activist pressure -
The group however plans to "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 proposal will meanwhile "establish a single line of shares to eliminate the complexity of Shell's A/B share structure", it added.
Shell's UK plans come after consumer goods giant Unilever became a wholly British company at the end of the last year after it completed a merger of its Dutch and British corporate entities.
Another setback for the Netherlands, and indeed Shell, saw a Dutch court in April order the company to slash its greenhouse gas emissions in a landmark victory for climate activists.
Shell must reduce its carbon emissions by 45 percent by 2030 as it is contributing to the "dire" consequences of climate change, the court in The Hague ruled.
The largest Dutch pension fund, ABP, then announced in October that it would stop investing in all fossil fuel companies including Shell.
At the same time however, Amsterdam has gained on London's financial hub following Brexit.
Shell Moves To UK, Drops 'Royal Dutch' In Share Structure Overhaul
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
Shell wants to move headquarters amid cleaner energy shift
A flag bears the logo of Royal Dutch Shell outside the head office in The Hague, Netherlands, on Monday, April 7, 2014.
Published Monday, November 15, 2021 7:17AM EST
Last Updated Monday, November 15, 2021 7:17AM EST
LONDON (AP) -- Royal Dutch Shell proposed moving its headquarters from the Netherlands to the United Kingdom and streamlining its structure Monday in hopes of making it easier to move forward in a world transitioning away from a dependence on fossil fuels.
The company, which has been incorporated in the U.K. with Dutch tax residency and dual class shares since 2005, said it wanted to move to a more conventional structure to make the company more competitive as it seeks to meet the challenges of shifting toward cleaner energy.
Dutch officials said they were "unpleasantly surprised."
"The government deeply regrets that Shell wants to move its head office to the United Kingdom," Dutch Economic Affairs and Climate Minister Stef Blok said. "We are in talks with the top of Shell about the implications of this move for jobs, critical investment decisions and sustainability."
He said the company had assured the government that "the personnel consequences of this decision will be limited to the relocation of a number of executive, board positions from the Netherlands to the United Kingdom."
Shell said that while it was proud of its Dutch heritage, the changes mean it would no longer use "Royal Dutch" in its name.
"The simplification will normalize our share structure under the tax and legal jurisdictions of a single country and make us more competitive," Shell Chairman Andrew Mackenzie said in a statement. "As a result, Shell will be better positioned to seize opportunities and play a leading role in the energy transition."
Shareholders will be asked to vote on the measure at a meeting Dec. 10.
The proposal hints at the complications Shell and other energy giants face as they plan for the day when demand for oil fades and major economies turn to electric-powered cars. Chief Executive Ben van Beurden has made it clear in the past that he intends to have the company remain competitive in a world that gets more of its energy from renewable sources.
His comments came amid an increased focus on the future of the industry after the 2015 Paris climate agreement led governments to commit to tougher action on emissions and shareholders push for more long-term plans.
Shifting from a company that makes fossil fuels to net-zero emissions businesses will involve decreasing investment in one part of the firm and increasing it in another, said David Elmes, an energy expert at the Warwick Business School.
Shell has been challenged, meanwhile, by activist investment firm Third Point to split into a legacy fossil fuel company that returns funds to shareholders from producing oil and a net-zero firm that raises its own capital from markets, Elmes said.
"Shell have replied that it's both the funds from declining fossil fuel activities and their transferrable capabilities that will allow them to be successful in making the transition as a single firm," Elmes said. "They have resisted Third Point's call to split the company."
At a time of pressure, the company is proposing more clarity. Shell's dual share structure is a legacy of a 2005 merger that created the company as it is known today. The structure makes it less clear to investors what they were buying and who they could expect payments from -- or at least more complicated than many similar firms.
"Unifying the share structure is a step to make this whole process of transforming the company more transparent and simpler for shareholders," Elmes said.
There are other pressures as well. Shell lost a landmark case brought by climate activists in the Netherlands earlier this year. The Hague District Court ordered the company to cut its carbon emissions by a net 45% by 2030 compared with 2019 levels, a decision activists hailed as a victory for the planet.
Peer de Rijk of Friends of the Earth Netherlands said Shell's changes would have no effect on the case. Shell said in July it was appealing the ruling.
"This news has no negative consequences for Milieudefensie's climate case against Shell. In any case, this lawsuit will remain with the Dutch courts," De Rijk said.
"Rather, moving to the United Kingdom opens up a new front, including for future cases," he added.
Shell is not the first multinational company to turn its back on the Netherlands. Last year, consumer goods giant Unilever -- owner of household brands such as Dove, Lipton teas and Ben & Jerry's ice cream -- said it was ending its Anglo-Dutch corporate structure and would be headquartered in London.
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