Minister hails ‘vote of confidence’ for Brexit Britain as Shell moves its HQ to London from the Netherlands and plans to scrap ‘Royal Dutch’ from its name
- Kwasi Kwarteng said decision – subject to a vote – would ‘create jobs’ in Britain
- Board meetings and senior executives will move to London in boost for capital
- Decision follows lawsuit by climate activists to force Shell to slash emissions
Oil giant Shell today announced it will move its headquarters and tax residence to the UK and drop ‘Royal Dutch’ from its name for the first time in 130 years.
The decision was hailed as a ‘clear vote of confidence in the British economy’ that will ‘create jobs’ by business secretary Kwasi Kwarteng. The firm pays hundreds of millions of pounds worth of taxes every year, which will now go to the Treasury.
Board meetings at what will now be known as ‘Shell Plc’ will be held in Britain, while the chief executives and finance bosses will be based in the country from now on.
The plans come after consumer goods giant Unilever became a wholly British company at the end of the last year after it completed a merger of its Dutch and UK corporate entities.
Board meetings at what will now be known as ‘Shell Plc’ will be held in Britain, while the chief executives and finance bosses will be based in the country from now on
Shell has been in a long-running tussle with the Dutch authorities over the country’s 15% dividend withholding tax, which Shell sought to avoid paying with its two share classes. Its new structure would resolve that issue.
The decision also follows pressure by activists in the Netherlands for the company to slash its harmful emissions.
In May, a Dutch court ordered Shell to deepen its planned greenhouse gas emission cuts in order to align with the Paris climate deal which aims to limit global warming to 1.5C.
Shell insisted today’s move would not have any impact on the legal proceedings and said it will appeal.
The Dutch government reacted with fury to the announcement, with Economic Affairs Minister Stef Blok saying: ‘We are unpleasantly surprised by this. The cabinet deeply regrets this intention.
‘We are in talks with Shell about the implications of this move for jobs, critical investment decisions and sustainability. Those are hugely important,’ Blok added.
Shell said it was not abandoning the Netherlands and would no longer qualify for the Royal Dutch designation following the proposed changes.
In London today shareholders can buy an A share or a B share in Shell. By folding these share categories into each other the company would be ‘simpler for investors to understand and value’, Shell said.
It will reverse a structure that the business took on in 2005 when Shell abandoned its dual-listed structure in the UK and the Netherlands.
Instead the two arms unified under one group, with a dual-share structure, an incorporation in the UK, and Dutch tax residency.
‘It was not envisaged at the time of unification that the current A/B share structure would be permanent,’ Shell said.
The company’s chair Sir Andrew Mackenzie said: ‘The simplification will normalise our share structure under the tax and legal jurisdictions of a single country and make us more competitive.
‘As a result, Shell will be better positioned to seize opportunities and play a leading role in the energy transition.
‘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.’
Business secretary Kwasi Kwarteng welcomed the announcement this morning
He said it was ‘welcome news’ and was part of [Shell’s] plans to accelerate the transition to green energy’
Shares will continue to be listed in Amsterdam, London and New York, it added.
They rallied 2% in London today but fell in Amsterdam.
Kwasi Kwarteng tweeted: ‘Welcome news that Shell is proposing to relocate its Group HQ to the United Kingdom as part of their plans to accelerate the transition to clean energy.
‘A clear vote of confidence in the British economy as we work to strengthen competitiveness, attract investment and create jobs.’
The largest Dutch pension fund, ABP, last month said it would stop investing in all fossil fuel companies.
It comes after Daniel Loeb, founder of New York-based hedge fund Third Point, took a stake in Shell to demand change.
‘Third Point called for a break-up of Shell into several entities and there is no hint of such a strategy in the announcement’ today, noted Russ Mould, investment director at AJ Bell.
‘Having one legal and tax domicile can increase speed of movement by reducing legal and financial complexity when it comes to acquisitions, disposals, cash returns to investors or fundraisings,’ he sai.
Friends of the Earth insisted Shell’s relocation would not affect its court case forcing the company to slash emissions. Pictured is the company’s London HQ
Stuart Joyne, from share research firm Redburn said: ‘This will allow faster buybacks and bring Shell’s tax residency into line with its country of incorporation in the United Kingdom. This is a clear post-Brexit win for the UK.’
Adam Matthews, chief responsible investment officer of the Church of England’s pensions board, said: ‘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.
‘We would be keen to understand how this will drive a more ambitious transition in line with the steps the company still need to take.’
Friends of the Earth insisted Shell’s relocation would not affect its court case forcing the company to slash emissions.
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