In a statement Royal Dutch Shell said, it would do away with its dual share structure and relocate its headquarters to Britain from the Netherlands.
The development comes at a time when the oil giant is facing increasing climate pressure in court as well as heightened taxes in the Netherlands.
Royal Dutch Shell has since long faced questions from investors about its dual structure and recently it has been hit by a Dutch court order over its climate targets; the company also aims to drop “Royal Dutch” from its name and become Shell Plc.
Royal Dutch Shell has been in a long-standing tussle with the Dutch authorities over the country’s 15% dividend withholding tax on some of its shares, making them less attractive for international investors. It introduced its two-class share structure in 2005 following a corporate overhaul.
The new single structure with all shares under British law means none of its shares would be under this tax. It would also allow Shell to strike faster sale or acquisition deals.
In a related development, last month, Netherland’s biggest state pension fund ABP said it would drop Shell and all fossil fuels from its portfolio.
In a statement the Dutch government said it was “unpleasantly surprised” by the company’s plans to move its headquarters from The Hague to London.
Shell’s decision to relocate to London is likely to be seen as a vote of confidence for Britain after its exit from the European Union.
With the news reaching the market, Shell’s shares, which will still be traded in Amsterdam and New York under the plan, rose by more than 2% in London.
“The current complex share structure is subject to constraints and may not be sustainable in the long term,” said Shell.
The change in corporate structure requires at least 75% of votes by shareholders at a general meeting to be held on December 10, said the company.
“Among other benefits, the proposed changes will increase Shell’s ability to buy back shares,” said Jefferies in a research note.
“If this decision will enable the company to be more agile in order to execute its transition to net zero, then it should be viewed positively,” said Adam Matthews, chief responsible investment officer at Church of England Pensions Board, a Shell shareholder.
Matthews, who is leading talks with Shell on behalf of the investor group Climate Action 100+, said it should not remove Shell’s responsibility to implement the Dutch court ruling.
In a statement Shell said, the change would not change the impact of the court decision.
Shell is also battling calls from activist investor Third Point for the company to be broken up into multiple companies.
Shell’s top executives are of the opinion that the company’s businesses have better synergy if they worked together.
Corporate giants are under growing pressure to simplify their structures with Johnson & Johnson, General Electric and Toshiba announcing plans last week to split into separate companies.
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