By YANGE IKYAA
Royal Dutch Shell has said it plans to relocate its headquarters from the Netherlands to the UK as part of new strategies to simplify its business structure.
The company’s shareholders will vote to decide on shifting its tax residence from the Netherlands to the UK. The move is intended phase out its dual share structure in favour of just one class of shares to boost “the speed and flexibility” of payouts to shareholders.
Ben van Beurden, Shell’s chief executive, will relocate to the UK with the company’s chief financial officer, Jessica Uhl, alongside seven other senior employees.
“Now, under pressure from an activist investor, and facing huge change as the world moves away from fossil fuels, the company has decided it is time to simplify further”
Business and Energy Secretary Kwasi Kwarteng, welcomed Shell’s announcement, tweeting that it was “a clear vote of confidence in the British economy,” but the Dutch government said it was “unpleasantly surprised” by Shell’s proposal.
Reports suggest that Dutch government officials are scrambling to find a parliamentary majority to scrap a 15% withholding tax charged on dividends, which Shell has previously described as a problem.
Stef Blok, economic affairs and climate minister, said earlier on Monday: “We are in a dialogue with the management of Shell over the consequences of this plan for jobs, crucial investment decisions and sustainability.”Royal Dutch Shell has a complicated share structure, as the company is currently registered in the UK, but its headquarters remains in the Netherlands.
There are two different types of shares – effectively a Dutch share and a UK share – and this affects the way payments to shareholders are taxed.
Now, under pressure from an activist investor, and facing huge change as the world moves away from fossil fuels, the company has decided it is time to simplify further. The move is designed to make payments to shareholders easier, while Shell says it will also help it to transform its business.
But whether intended or not, this is also a deeply political move. If the proposals are adopted, Shell will no longer be “Royal Dutch” – and questions are being asked in The Hague about the extent to which the new company will be Dutch at all.
The decision to simplify Shell’s structure comes after Third Point, a US activist investor, recently bought a stake in the company and suggested the business should be split into two firms.
Third Point told Shell in a letter it should split itself into “multiple standalone companies”, one of which would house its legacy oil and gas business while another would contain renewable energy.
Mr van Beurden dismissed Third Point’s proposal weeks ago in an interview with the BBC, insisting that while Shell could transition to net zero by 2050, the move to greener energy could only be funded by oil and gas.
Earlier this year, a court in the Netherlands ruled that by 2030 Shell must cut its CO2 emissions by 45% compared to 2019 levels. The decision only applies in the Netherlands and Shell said it would appeal against the ruling.