By Toyin Akinosho
European oil giant AngloDutch Shell is about to drop the prefix AngloDutch or RoyalDutch and simply be Shell.
The name change will happen if the shareholders approve, in full, a special resolution at a proposed General Meeting scheduled for December 10, 2021.
The broad proposal, put forward by the Board of Royal Dutch Shell plc, is for a simplified structure that will establish a single line of shares to eliminate the complexity of Shell’s A/B share structure, and align Shell’s tax residence with its country of incorporation in the UK, where it will hold Board and Executive Committee meetings, and locate its chief executive and chief financial officer.
The proposed structure should enhance the speed and flexibility of capital and portfolio actions, strengthen Shell’s competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net-zero emissions business.
Shell has been incorporated in the UK with Dutch tax residence and a dual share structure since the 2005 unification of Koninklijke Nederlandsche Petroleum Maatschappij and The Shell Transport and Trading Company under a single parent company. It was not envisaged at the time of unification that the current A/B share structure would be permanent.
A conventional single share structure will allow Shell to compete more effectively. It will:
- Allow for an acceleration in distributions by way of share buybacks, as there will be a larger single pool of ordinary shares that can be bought back. Following the start of a $2Billion buyback programme in July 2021, Shell announced in September 2021 that it will return an additional $7Billion to shareholders following completion of the sale of its Permian assets in the United States.
- Strengthen Shell’s ability to rise to the challenges posed by the energy transition, by managing its portfolio with greater agility.
Reduce risk for shareholders by simplifying and normalising Shell’s share structure in line with its competitors and most other global companies. The current complex share structure is subject to constraints and may not be sustainable in the long term.
Following the simplification, shareholders will continue to hold the same legal, ownership, voting and capital distribution rights in Shell. Shares will continue to be listed in Amsterdam, London and New York (through the American Depository Shares programme), with FTSE UK index inclusion. It is fully expected AEX index inclusion will be maintained. Shell’s corporate governance structure will remain unchanged.
Shell is proud of its Anglo-Dutch heritage and will continue to be a significant employer with a major presence in the Netherlands. Its Projects and Technology division, global Upstream and Integrated Gas businesses and renewable energies hub remain located in The Hague.
Shell’s growing presence in wind projects off the Dutch coast, recent decision to build a world-scale low-carbon biofuels plant at the Energy and Chemicals Park Rotterdam, plan to build Europe’s biggest electrolyser in Rotterdam, and its intention to participate in the Porthos carbon capture and storage project, all underline the importance of the Netherlands to the company’s energy transition activities.
Carrying the Royal designation has been a source of immense pride and honour for Shell for more than 130 years. However, the company anticipates it will no longer meet the conditions for using the designation following the proposed change. Therefore, subject to shareholder approval of the resolution, the Board expects to change the company’s name from Royal Dutch Shell plc to Shell plc.