Interactive Investor

Big changes at Royal Dutch Shell as simplification put to the vote

15th November 2021 15:02

Lee Wild from interactive investor

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Like Unilever before it, Royal Dutch Shell will vote on becoming a 100% British company, making things easier for shareholders to understand.

Sixteen years after the merger of Royal Dutch Petroleum and Shell Transport and Trading, the Anglo-Dutch company is proposing to simplify its share structure, shift its tax residence to the UK and change its name.

If shareholders agree, there will be just one line of shares, making it more straightforward for investors to understand and value, the company says. 

The move comes just a year after shareholders in fellow Anglo-Dutch company Unilever (LSE:ULVR) voted in favour of moving its HQ to London.

Currently, there are two types of ordinary shares investors can buy - Royal Dutch Shell Class A (LSE:RDSA) shares and Royal Dutch Shell B (LSE:RDSB) shares. The A shares (formerly Royal Dutch) are primarily listed in Amsterdam, with a secondary listing in London. The B shares (formerly Shell Transport and Trading) are primarily listed in London. Class A ordinary shares and Class B ordinary shares have identical rights.

Shell, which has been incorporated in the UK with Dutch tax residence and a dual share structure since the 2005, says the move will “strengthen Shell’s competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net-zero emissions business”.

By shareholder distributions, Shell is primarily referring to share buybacks. A single share structure means a large single pool of shares to buy back. A $2 billion buyback programme began in July, and an extra $7 billion after the sale of Shell’s Permian assets in the US.

You can read more about the history of Shell’s share structure here.

Shareholders will be able to vote on the resolution at a general meeting in Rotterdam at 9am UK time on 10 December. It will require the approval of at least 75% of the votes cast in the meeting to be passed.  

Shell says its shares will still be listed in Amsterdam, London and New York, and that shareholders will retain the same legal rights following the simplification.

Because it will no longer meet conditions for carrying the Royal designation following the proposed change, the company will just be known as Shell.

Answers to some expected questions are provided at www.shell.com/simplification. You can visit the same webpage to find details of an online question and answers session on 30 November.   

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