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Shell is planning to scrap its dual share system and strike “Royal Dutch” from its name as it prepares to move its tax residence from the Netherlands to the UK.
The move, which was welcomed by the UK government, will mean relocating its chief executive, Ben van Beurden, and its chief financial officer, Jessica Uhl, to London, where the company’s board meetings will be held.
Shell will no longer meet the Dutch conditions to qualify for the “royal” designation as a result of the shift in tax home, resulting in a name change that will be put to a shareholder vote next month, alongside the broader plans to simplify the company’s structure.
The firm also intends to scrap a dual share structure that divides stock into A and B classes, though it will continue to trade in the Amsterdam, London and New York markets.
The energy company said the decision would “increase the speed and flexibility of capital and portfolio actions”. However, the Dutch economic affairs and climate minister, Stef Blok, said he was “unpleasantly surprised” by the move, adding that officials were in talks with Shell about the consequences this would pose for the company’s sustainability strategy.
The move comes months after a court in the Netherlands ruled in May that Shell had to reduce its emissions by 45% by 2030, compared with 2019 levels. The landmark case, which was brought by environmental groups and more than 17,000 Dutch citizens, applies only in the Netherlands. Shell confirmed in July it would appeal against the ruling.
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The UK business secretary, Kwasi Kwarteng, said in a tweet on Monday morning that the company’s overhaul was “a clear vote of confidence in the British economy as we work to strengthen competitiveness, attract investment and create jobs”.
Welcome news @Shell is proposing to relocate its Group HQ to the United Kingdom as part of their plans to accelerate the transition to clean energy. A clear vote of confidence in the British economy as we work to strengthen competitiveness, attract investment and create jobs 🇬🇧
— Kwasi Kwarteng (@KwasiKwarteng) November 15, 2021
The company changes also come after the US hedge fund Third Point, which is led by Daniel Loeb, disclosed a large stake and started to push for changes including a break-up of the energy giant. Third Point accused Shell of having “an incoherent, conflicting set of strategies attempting to appease multiple interests but satisfying none”.
Laura Hoy, an equity analyst at Hargreaves Lansdown, said the overhaul would have little impact on investors but that “ultimately, the new structure would be a net positive for shareholders as it will streamline the company and make it easier to manoeuvre moving forward”.
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