Fossil fuel supermajor Shell today announced proposals for its slimmed down structure, including a single headquarters and tax residence in Britain.
Subject to approval sought from shareholders on 10 December, the company will drop its dual classes of “A” and “B” shares, and use London as the sole operating base for CEO Ben van Beurden and its board. The ‘Royal Dutch’ prefix will also cease.
The simplification is designed to strengthen Shell’s competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net-zero emissions business”, a statement informed investors.
Unification in 2005 of Koninklijke Nederlandsche Petroleum Maatschappij and the Shell Transport and Trading Company created a single incorporation in the UK, but with Dutch tax residence. The resulting A and B share structure was never envisaged to be permanent, today’s statement asserts.
Faster distributions to shareholders in the form of buybacks are presented as an advantage of today’s proposed move. A larger single pool of ordinary shares will speed progress of a $2 billion buyback programme in July.
Shell went further in September, announcing that sale of its Permian fracking assets in the USA will now yield a further $7 billion windfall to existing investors.
Sir Andrew Mackenzie, Shell’s chair 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 our Powering Progress strategy, while creating value for our shareholders, customers and wider society.”
The company stressed shareholders would continue to hold the same legal, ownership, voting and capital distribution rights. Shares will continue to be listed in Amsterdam, London and New York (through the American Depository Shares programme), with FTSE UK index inclusion.
Energy secretary Kwasi Kwarteng hailed the proposed move. In a tweet this morning, he described it as “a clear vote of confidence in the UK economy as we work to strengthen competitiveness, attract investment and create jobs”.
But the Netherlands’s ruling coalition took the announcement amiss. Posting on Twitter, economic affairs minister Stef Blok said: “We are unpleasantly surprised by this. The cabinet deeply regrets this intention.
“We are in talks with Shell about the implications of this move for jobs, critical investment decisions and sustainability.
“Shell has assured us 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.
Despite divestment campaigns mounted by activists opposing fossil fuel exploitation, analysts estimate that at least 25% of all dividends distributed by London-quoted entities come from firms extracting oil, gas, coal and other minerals.