Royal Dutch Shell PLC shareholders were expected to vote on Friday to approve a plan to get rid of the company’s dual share structure and move its headquarters to London from The Hague.
The company’s boards presented the plan in November https://www.reuters.com/world/uk/shell-proposes-single-share-structure-tax-residence-uk-2021-11-15, arguing that the simplification would strengthen Shell’s competitiveness and make paying dividends and share buybacks easier.
The plan, which would see the company lose the “Royal Dutch https://www.reuters.com/business/energy/shell-shake-up-leaves-dutch-royally-hacked-off-2021-11-15 ” title it has held for more than a century and become “Shell PLC” requires approval by 75% of shareholder votes cast at a meeting in Rotterdam. The company’s boards would then meet later to make a final decision, with the move planned sometime in early 2022.
Critics say Shell’s decision was motivated in part by a Dutch court ruling in May https://www.reuters.com/business/sustainable-business/dutch-court-orders-shell-set-tougher-climate-targets-2021-05-26 that ordered it to cut carbon emissions by 45% by 2030. Shell, which is appealing the ruling, says its environmental policy will not be affected by the move.
Taxation was a factor. Because the company’s headquarters and tax home are now in the Netherlands, dividends it pays on its “A” shares are subject to a 15% Dutch withholding tax.Equal payments for “B” shares are distributed through a “Dividend Access Mechanism” that sees them streamed through a trust registered on the Channel Island Jersey to avoid the Dutch tax.
The new single-share structure and British tax home will resolve those issues, as Britain does not levy a dividend withholding tax.
The company plans to return $7 billion in proceeds to shareholders from the sale of gas assets in the U.S. to ConocoPhillips. https://www.shell.com/media/news-and-media-releases/2021/shell-signs-agreement-to-sell-permian-business.html
The Dutch government says it is “disappointed” by Shell’s decision to leave and a member of parliament for the Green party raised the idea of levying an “exit tax” on the company. That has failed to gain support.
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