Royal Dutch Shell has decided to give up its dual share structure and move its head office to the United Kingdom from the Netherlands. The company is also moving its tax residence to Britain. The decision comes as the oil giant was pushed away by Dutch taxes. The decision of Shell to ditch royal designation has sparked mixed reactions from both sides of the North Sea. This is mainly because the company enjoyed the royal designation for almost 114 years. The oil and gas supermajor will now be known as Shell Plc. The company has been long questioned about its dual structure from investors. It also faced climate pressure in court and has been actively working on reducing dependency on fossil fuels. The Anglo-Dutch firm has been working on restructuring its business. It said the move would strengthen the company’s competitiveness. “The decision will definitely strengthen our competitiveness. It will also accelerate both shareholder distributions. The most important thing is that it will help in the delivery of its strategy to become a net-zero emissions business,” the company shed. It was in 2005 when Shell was incorporated in the United Kingdom with dual-class shares and Dutch tax residency. Recently, another big Dutch company did the same thing. Unilever had picked the UK as its home.
Shell has described the move as necessary simplification. However, the Dutch government said that it was an “unpleasant surprise.” The Dutch government also said that it was in talks with the top management of the oil company over the consequences of this decision. “The government deeply regrets that a major oil company wants to shift its head office away from the Netherlands. We are discussing with the top officials of the company about the implications of the move, how it will affect jobs,” said Stef Blok, Dutch Economic Affairs and Climate Minister. Blok said that the multinational firm has assured that the consequences of the decision to move its head office will only be limited to the relocation of a few executives. Once the decision is implemented, the chief executive and chief financial officer of the company would move to London. There are others too who are surprised by the decision of Shell to move to London from the Hague. Shell has announced its plan to shift base, but it will need approval from shareholders. For this, 75 percent of shareholders need to vote in favor of the decision during the general meeting. The meeting has been scheduled for December 10.
Shell said that it had no option but to take this step to simplify its corporate structure. This is because the present structure may not be sustainable in the long run, the firm had said. “Also, the decision will present value of the company more clearly to shareholders.” Shell chairman Andrew Mackenzie said that the move will not only normalize our share structure but it will also place us in a better position to seize opportunities. The company took this decision after it lost a landmark case in May that was brought by climate activists. In its ruling, the company was asked by the Hague District Court to deepen its planned greenhouse gas emission cuts in order to align with the Paris climate deal. The Paris climate deal aims to limit global warming to 1.5 degrees Celsius. The court clearly ordered Shell to cut its carbon emissions by a net 45 percent by 2030. The court’s decision was hailed as a victory for the planet. However, Shell said that it would appeal against the ruling. Also, Shell is facing other issues. The most important was a call given by activist investor Third Point to break the firm into multiple companies. Shell had hit back, saying the businesses work better together. Several big firms are under pressure to simplify their structures. Toshiba, General Electrics, and Johnson & Johnson have already announced their plans to split into separate companies.