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Royal Dutch Shell, part of a restructuring plan for the company, has revealed plans to relocate its headquarters to the UK.

Shareholders will be asked to vote to move the oil company’s tax residency from the Netherlands into the UK.

To increase “speed and flexibility” in shareholder payouts, it also plans to eliminate its dual-share structure.

Ben van Beurden will be Shell’s chief executive and relocate to the UK.

Jessica Uhl will move with seven other high-ranking employees.

Kwasi Kwarteng, Energy and Business Secretary to Shell, welcomed Shell’s announcementHe tweeted that the tweet was “a clear vote in confidence in British economic.”

But, the Dutch government stated that Shell’s proposal was unpleasantly surprising.

Stef Blok is the minister for economic affairs, climate and energy. He said, “We are having a dialog with Shell’s management about the consequences of this plan regarding jobs, key investment decisions, sustainability, and other issues.”

Royal Dutch Shell is a complicated company structure. Royal Dutch Shell is registered as a company in the UK but has its headquarters in the Netherlands.

The tax treatment of shareholders’ payments will be affected by the existence of two types shares: a UK share and a Dutch one.

The company decided to simplify its operations further after being pressured by an activist investor and having to deal with huge changes in the face of the global shift away from fossil fuels. Shell states that this move will simplify payments to shareholders, and it will help the company transform itself.

This is a highly political decision, whether it was intended or not. Shell won’t be “Royal Dutch”, if these proposals are approved. In The Hague, questions are being raised about whether or not the new company will actually be Dutch.

The company stated that it was proud of its Anglo Dutch heritage, and would continue to be an important employer with a strong presence in the Netherlands.

Its technology division, projects, and global upstream and integrated natural gas businesses as well as the hub for renewable energies remain in The Hague.

Third Point, an activist investor from the United States, bought Shell’s stake and recommended that the structure be simplified. According to Wall Street Journal,

Third Point wrote Shell a note in which it suggested that Shell should be split into several independent businesses. One company would host its legacy oil and natural gas operations, the other would hold renewable energy.

Mister van Beurden rejected Third Point’s suggestion in an interview with BBC this month. According to him, Shell could reach net zero by 2050. However, funding for greener energy would only come from oil and natural gas.

An earlier this year Dutch court ruled Shell had to cut its CO2 emissions in 2030 by at least 45 percent compared to 2019. Shell responded that the ruling would not be enforced in its home country of the Netherlands.

Shell, which was established in 2005 and is a UK corporation with a Dutch tax residence, has held this dual share structure since 2005.

Shell will be the new company’s name. Shell will no longer bear “Royal Dutch”. This is a legacy of 1890, when the Royal Dutch Petroleum Company was founded. This company joined the UK Shell Transport and Trading Company (UK) in 1907.

Shell stated that Shell’s Royal title has been an enormous source of pride and honor for them for over 130 years.

“Nevertheless, it anticipates that the changes to the proposal will mean the company won’t meet the requirements for the use of the designation.”

Shell stated that the simplified structure of its shares would allow it to accelerate shareholder distributions, such as share buybacks.

The company announced a $2bn (£1.5bn) share buyback in July and will distribute an additional $7bn from the sale of its Permian Basin oilfield in the US.

Laura Hoy from Hargreaves Lansdown, equity analyst, stated that investors won’t notice any changes except for the fact that shares held will not be marked ‘Royal.’

Shell’s long-term success story still depends on oil prices. The group is able to keep its cash reserves full because of the current buoyant oil price. With the move to sustainable energy gaining momentum, we expect the group will need to continue investing in greener operations to keep the shareholders happy.

Shell’s shares rose almost 2% by Monday morning. According to Shell, its shares will continue being listed in New York City and London as well as Amsterdam.

The proposals will be voted on by shareholders at the meeting that takes place on December 10.



Source: BBC.com

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