The multinational oil giant Shell has sparked a political skirmish over the site of its headquarters after declaring it would shift to London abandoning “Royal Dutch” from its name in a corporate overhaul that has infuriated the Netherlands.
“Royal Dutch Shell” being a name the company had retained for 130 years.
Upon learning that Shell was relocating its headquarters from The Hague to the UK, Stef Blok, the Minister of Economic Affairs of the Netherlands, tweeted about the issue.”We are unpleasantly surprised by this. The cabinet deeply regrets this intention”.
Shell will forage for shareholder’s approval for the reposition of its tax residence from the Netherlands to the UK, as well as cast aside its dual-class share structure for a single-class share structure, which will boost shareholder payouts not only in terms of speed but also flexibility.
As a result of these changes, Shell is boosting its competitiveness while accelerating shareholder distributions and delivering its long-term strategy of becoming an emissions-free business.
The goal being to slash its emissions by 2030. The instigation of this was due to a Dutch court ordering in April stating that the largest carbon emitter should reduce its emissions by 45% by 2030. This was hailed as a huge victory for climate activists.
According to Shell, it will keep many of its divisions in The Hague, especially those dealing with technology and renewable energy.
In addition Shell has been in confrontation with Dutch authorities for quite some time over the country’s 15% dividend withholding tax on some of its shares. As a result, Shell’s shares are less attractive to international buyers.
Furthermore, the country’s largest pension fund announced in October that it would cease investing in fossil fuel companies. However, the company will continue to list shares in Amsterdam along with London and New York.
Having cut its dividend, Shell has reduced its dividend payout for the first time since the Second World War.
In July of last year, the company’s chief executive hinted that it might move its headquarters to the UK. At that time, two other large Dutch-English companies had already set an example.
Unilever, a consumer goods giant, merged its Dutch and British subsidiaries in June last year to become a solely British corporation.
This consists of UK-based Unilever plc and Netherlands-based Unilever NV – into a single company with British headquarters with the Dutch government having expressed dissatisfaction with the move.
In Unilever’s case – and, it is presumed, in Shell’s case – the 15% withholding tax charged by the Dutch government on dividends paid by domiciled companies was one factor.
Although it may appear that this alteration may seem brash, it is the climax of a 10 year long undertaking (investors have been stipulating this for years).
During his remarks, Sir Andrew Mackenzie, the chairman, noted: “At a time of unprecedented change for the industry, it’s even more imperative that we have an increased ability to accelerate the transition to a lower-carbon global energy system.
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.