Shell Intends to Relocate its Headquarters to the United Kingdom.

International

Royal Dutch Shell has revealed plans to relocate its headquarters to the United Kingdom as part of a restructuring of the company’s structure.

The oil company will put the issue to its shareholders for a vote on whether it should change its tax residency from the Netherlands to the United Kingdom.

It also intends to abandon its dual share structure in favor of a single class of shares in order to improve “the speed and flexibility” of shareholder distributions.

Ben van Beurden, the CEO of Shell, will migrate to the United Kingdom.

Jessica Uhl, the company’s chief financial officer, will also be leaving, along with seven other top executives.

Shell’s move was applauded by Business and Energy Secretary Kwasi Kwarteng, who tweeted that it was “a clear vote of confidence in the British economy.”

The Dutch government, on the other hand, expressed “unpleasant surprise” at Shell’s suggestion.

“We are in a communication with Shell management about the implications of this strategy for jobs, critical investment choices, and sustainability,” said Stef Blok, minister of economic affairs and climate change.

The structure of Royal Dutch Shell is rather complex. Although the corporation is now registered in the United Kingdom, its headquarters are in the Netherlands.

There are two sorts of shares – basically, a Dutch share and a UK share – and this impacts how dividends are taxed.

Now, under pressure from an activist investor and facing significant upheaval as the globe shifts away from fossil fuels, the corporation has opted to simplify even more. The change is intended to make shareholder payments easier, and Shell claims it would also aid in the transformation of its company.

However, whether intentional or not, this is a highly political action. If the proposals are approved, Shell will no longer be “Royal Dutch,” and doubts are being raised in The Hague about how much of the new corporation would be Dutch at all.

“Shell is proud of its Anglo-Dutch roots and will continue to be a substantial employer with a significant presence in the Netherlands,” the firm stated.

“Its projects and technology division, worldwide upstream and integrated gas companies, and renewable energy hub will continue to be based in The Hague.”

According to the Wall Street Journal, the move to simplify Shell’s structure comes after Third Point, a US activist investor, recently purchased a share in the corporation and recommended splitting the business into two entities.

Mr van Beurden rejected Third Point’s idea in an interview with the BBC earlier this month. He stated that while Shell could achieve net zero emissions by 2050, the shift to cleaner energy could only be supported by oil and gas.

Earlier this year, a Dutch court determined that Shell must reduce its CO2 emissions by 45 percent by 2030 compared to 2019. The judgement only applies in the Netherlands, and Shell has stated that it would appeal the decision.

Since 2005, Shell has been incorporated in the United Kingdom and has had a Dutch tax residency – as well as the dual share structure.

The corporation will also be renamed Shell and will no longer be known as “Royal Dutch.” This part can be traced back to 1890, when the Royal Dutch Petroleum Company was established. In 1907, that corporation amalgamated with the Shell Transport and Trading Company of the United Kingdom.

“For more than 130 years, carrying the Royal designation has been a source of enormous pride and honour for Shell,” Shell said.

“However, the firm predicts that, as a result of the proposed change, it will no longer fulfill the standards for utilizing the designation.”

Shell stated that because of the simpler share structure, it will be able to “accelerate” shareholder dividends, including as share buybacks.

In July, the firm announced a $2 billion (£1.5 billion) share repurchase, and it would distribute an extra $7 billion from the sale of its Permian Basin oilfield in the United States.
“Aside from the fact that the shares they own will no longer be designated as ‘Royal,’ this new alignment will not affect anything for investors,” said Laura Hoy, an equities analyst at Hargreaves Lansdown.

“The long-term growth scenario for Shell is still strongly dependent on the oil price.” For the time being, rising oil prices are keeping the group’s financial reserves full. However, as the inevitable transition to more sustainable energy accelerates, we anticipate that the requirement to invest in greener operations will limit what the firm can pass on to sharehoarders.

Shell’s stock increased by over 2% on Monday morning. The corporation stated that its shares will remain listed in Amsterdam, London, and New York.

At a meeting on December 10, shareholders will vote on the recommendations.