Shares in Royal Dutch Shell (RDSB) gained 2% to £16.90 as it announced an end to its dual class structure.
The company was recently put under pressure as activist investor Dan Loeb’s Third Point Investors (TPOU) took a stake in the firm and pushed for a break up.
The simplification proposal, to be voted on at Shell’s annual general meeting, would see the company establish a single line of shares to eliminate the complexity of its A/B share structure.
Unlike other firms like Unilever (ULVR), BHP (BHP) with dual heritage and split structures, the former of which flirted with exiting its UK domicile and surrendering its FTSE 100 status and the latter of which looks set to do so, Shell is effectively committing to London and its FTSE status. It is also dropping the ‘Royal Dutch’ from the name.
Shell had been incorporated in the UK with Dutch tax residence and a dual share structure since 2005.
ACCELERATING THE TRANSITION
The company’s genesis as a combination between the Netherlands company N.V. Koninklijke Nederlandsche Petroleum Maatschappij and the UK’s Shell explains the A and B share structure with the A shares subject to 15% Dutch withholding tax on dividends and the B shares exempt from this levy.
Under the plan its shares will continue to be listed in Amsterdam, London and New York.
Shell added that it was ‘proud of its Anglo-Dutch heritage’ and would continue to be a significant employer with a ‘major presence’ in the Netherlands.
‘At a time of unprecedented change for the industry, it’s even more important that we have an increased ability to accelerate the transition to a lower-carbon global energy system,’ chairman Andrew Mackenzie said.
‘A simpler structure will enable Shell to speed up the delivery of its powering progress strategy, while creating value for our shareholders, customers and wider society.’
